Italy – reduction of the deficit receives top priority causing moderate growth in all construction markets

While the Italian government gives reduction of the deficit top priority, the country still suffers from poor credit opportunities and high unemployment rates. It is projected that the growth of all construction markets will be moderate.

Growth of the construction market remains moderate

The Italian construction industry is expected to remain moderate with a slightly positive growth at a CAGR of 0.28% by 2016. This comes as good news for Italy after recording a decline of -3.42% CAGR from 2007-2011. Residential construction is the largest market within the construction industry, with a 57.3% share of the total industry value and a CAGR of -2.29% from 2007-2011.

Cautious consumer spending has a negative effect on commercial construction

In the latest budget, the government increased VAT, which had an adverse effect on the retail sector. Consumer spending remains cautious as a result of rising unemployment rates, minimal wage increases and a bleak economic outlook. This has a negative effect on the commercial construction market which recorded the largest decline of all construction markets with a CAGR of-6.2% from 2007-2011.

Tough economic times challenge the institutional and infrastructure construction markets

The institutional construction market is expected to record a CAGR of -0.45% by 2016. Factors such as bleak economic conditions, difficulties in sourcing credit, a lack of employment opportunities and government spending cuts indicate a deflated institutional construction market in the coming years. Infrastructure construction is forecast to grow at a CAGR of 0.63% by 2016. The current challenge in this regard is the weak levels of investor confidence and the presence of austerity measures taken by the government.