In the 1st quarter of 2024, the IRG SGH construction confidence indicator (IRGCON) has a negative value of -10.5 pts, lower by 0.6 pts than in the previous quarter, but higher by 3.8 pts than in the 1st quarter of 2023. The indicator remains below the average for the first quarters of three years before the COVID-19 pandemic (2017-2019), which amounts to -5.2 pts. The deterioration of the situation in the construction industry is of seasonal nature. The construction industry is being affected by the release of funds from the National Recovery Plan, the introduction of EU regulations aimed at ensuring zero-emission and the upcoming local government elections, which determine the reduced willingness of local governments to undertake investment projects. In these circumstances, construction companies participating in the January survey predict a significant improvement in the economic situation in the 2nd quarter.
Production, orders and production capacity utilization decreased. Construction companies reduced employment and report deterioration of their financial situation. However, they assess the general economic situation in Poland much better than a quarter ago, which may impact on the situation in the industry in the following quarters. They already assess it as better than in the 4th quarter of 2023, and the forecast for the second quarter of this year is even more optimistic.
High prices of raw materials and construction materials remain a serious problem in the industry. In the 4th quarter of the last year this barrier was indicated by 53.1% of surveyed enterprises, currently this percentage is 56.3%. Enterprises also consider tax burden (47.4% currently, 50.8% in the previous quarter) and unstable laws (44.8% currently, 37.3% in the previous quarter) to be the main barriers to construction activity. The importance of weather conditions increases significantly in the current quarter – over 42% of respondents (13.6% in the previous quarter) reported them to be bothersome.
Researches
Konrad Walczyk, kwalcz1@sgh.waw.pl
Ewa Ratuszny, eratus@sgh.waw.pl