Construction industry expanded 3.7% in 2009

2010-02-05

December results yielded further growth of the Polish construction industry – construction and assembly output increased by 3.1%. As a result, preliminary data suggests that construction and assembly output grew by 3.6% in nominal terms and by 3.7% in real terms in 2009, to close to PLN 80bn.

Final data for the year will be published by GUS at the end of July 2010, and we expect that traditionally they will be slightly better than the preliminary numbers – based on our estimates, the annualised pace of growth of construction and assembly output for companies employing more than nine persons will be at least 4%.
Construction growth in 2009 was a consequence, primarily, of the activity of companies specialising in civil engineering works (up by 16.9%), while companies specialising in erecting buildings noted a decline in output – down by 1.1% as did companies engaged in specialist construction works – down by 5.3%.
The December figures confirmed that we are at the beginning of a reversal in the construction price trend – annual growth of construction and assembly prices stood at only -0.6%. This means that prices offered in cost estimates prepared by construction firms will stop to decline and in the second half of 2010 they should enter an uptrend



According to preliminary GUS estimates published at the end of January, Poland’s gross domestic product for 2009 was 1.7% relative to 5% in 2008 – which means Poland was the only economy in Europe that closed the year on a plus, and its result is better than most forecasts formulated at the beginning of 2009. The main reason for the sound performance of the Polish economy is the large internal market and its lesser, relative to other countries in the region, dependence on exports.
Looking at GUS data, growth was the result of, primarily, very good performance of the construction industry (gross value added up by 4.7%), and market services (up by 2.5%) and private consumption (up by 2.3%). Industry output made a much smaller contribution to the GDP (down by 1.1%).



In the final months of 2009, Polish companies sold off their inventories in fear of the fate of future demand. Yet, as a consequence, economic growth will be fostered by them replenishing their inventories which were significantly downsized during the economic slowdown. This also applies to building materials.
Complete data for the final quarter of last year will be released by GUS at the beginning of March 2010. Yet, it is plausible that GDP growth in Q4 was as high as 3%. According to most forecasts, in 2010 and 2011 Poland should remain among the most rapidly developing countries of the European Union which will shake off the recession very slowly.

Bartłomiej Sosna
Senior Construction Analyst
PMR Publications

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