Italian Construction Market: 0.28% CAGR by 2016 Says A New Research Report at ReportsnReports.com

Dallas, Texas (PRWEB) February 04, 2013

The Italian construction industry recorded a CAGR of 3.42% during the review period. The market is expected to grow at a CAGR of 0.28% over the forecast period. Residential construction was the largest market, with a 57.3% share of the total industry value and recorded a CAGR of 2.29% during the review period. A contracting GDP, widening budget deficit and downgrading of the Italian governments credit ratings have clearly dented consumer confidence.

Poor credit opportunities and high unemployment rates

Commercial construction recorded a CAGR of 6.62% during the review period, the largest decline of all construction markets in Italy. The retail sector recorded subdued levels of investment. Consumer spending is cautious owing to rising unemployment rates, minimal wage increases and a bleak economic outlook. In the latest budget, the government increased VAT, which had an adverse affect on the retail sector. The institutional construction market is expected to record a CAGR of 0.45% over the forecast period. Factors including bleak economic conditions, difficulties in sourcing credit, a lack of employment opportunities and government spending cuts indicate a deflated institutional construction market for some time to come. Infrastructure construction is forecast to grow at a CAGR of 0.63% over the forecast period. Mobilizing funds from both public and private entities pose a challenge in the presence of austerity measures taken by the government and weak levels of investor confidence.

Weak economic conditions

The seasonally adjusted real GDP declined by 0.7% in the second-quarter of 2012, as against the first-quarter of 2012 and by 2.5%, when compared with the second-quarter of 2011, according to the Italian National Statistics Office (ISTAT). In June 2012, the seasonally adjusted industrial production index declined by 1.4%, as compared to May 2012. The nations total expenditure is likely to decline, another factor which will decelerate investment and construction activities. Italys budget deficit widened from 7% of GDP in 2011 to 8% in 2012. The Italian government announced that the reduction of the deficit will be its top priority. Owing to austerity measures, it is projected that the growth of all construction markets will be moderate.

Downgraded credit rating

The Word Banks Doing Business 2013 report ranks Italy 73 out of 185 global economies. Italy still ranks lower than other large European economies such as Germany, France, Spain, Sweden and Poland. Manufacturing and industrial business confidence declined month-on-month in October 2012, caused by a weak order outlook in the manufacturing sector and the poor intermediate-goods outlook of the industrial sector. Italys budget stands at 8% of the countrys GDP. This has forced the government to reduce public spending, which has weakened both consumer and investor confidence. In September 2012, the group index comprising the manufacturing, construction, services and retail sectors declined sharply month-on-month. GDP contraction, a high fiscal deficit, decelerated levels of retail activity; declining manufacturing output and the downgrading of Italian governments credit rating have adversely affected business confidence levels.

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