Boston, MA -- (SBWIRE) -- 10/31/2013 -- The German construction industry registered a CAGR of 3.00% during the review period (2008-2012). Growth was fuelled by a rise in disposable income and stable employment. Salaries in Germany increased by 9.1% between 2008 and 2012, while the unemployment rate stood at 5.3% in 2012. This demand factor contributed to a steady increase in construction activity during the review period. Growth was also supported by investments in the country's export-oriented industrial sector, which accounted for 26.1% of the country's GDP in 2012. The industry is anticipated to post a forecast-period (2013-2017) CAGR of 2.22%, with future growth mainly driven by expansion in the residential construction market.

Key Highlights

- Germany's GDP growth decreased from 3% in 2011 to 0.7% in 2012 owing to subdued external demand and weak investment.
- According to Timetric projections, Germany's real GDP is likely to expand by 0.4% in 2013 and 1.5% in 2014, supported by a rise in private consumption. However, persistent weak economic activity in the eurozone will continue to affect investment and exports.
- The German construction industry recorded a decline in 2012 after recovering from the financial crisis and registering respective growth rates of 4.7% and 7.9% in 2010 and 2011. Industry value declined by 0.3%, while growth in construction value add contracted from 5.6% in 2011 to 1.4% in 2012, as the eurozone crisis worsened and Germany experienced its impact with a contraction in investments.
- Prospects for the German construction industry are likely to be hampered by a shortage in workforce being recorded, with the situation expected to worsen over the years. Owing to a decline in fertility rates, the working-age population (aged between 20 and 65 years) is anticipated to decline from 49.6 million in 2008 to 42.1 million in 2030 and 32.6 million by 2060. The government plans to increase the retirement age from 65 to 67 years by 2029. Efforts to boost immigration and ease restrictions on labor mobility within the EU are considered another potential solution to the problem.
- Germany is the world's largest exporter of machinery and equipment (M&E) with 16.1% of total world exports valuing EUR931 billion in 2012. The M&E sector is also Germany's largest sector with a turnover of EUR209 billion in 2012 and providing employment to over one million people. The sector received foreign investment in around 475 projects between 2003 and 2012. Around 75% of products are exported and prospects for the sector are upbeat. There is large demand for these products from major markets such as the US, which is on the course of steady recovery, and the BRIC (Brazil, Russia, India and China) countries, which are experiencing slowing yet stable demand.

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Companies Mentioned in this Report: Hochtief AG, Bilfinger SE, Linde Engineering, Strabag AG, Max Bogl Bauservice GmbH & Co. KG

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