In addition to the general economic development of individual countries and regions, the economic performance of the Wilo Group is especially influenced by the construction and sanitary industries, among others. Development in these industries in the 2016 financial year is presented below. The country-specific definition of the regions is based on the segment reporting of the Wilo Group.
Growth spurt for the construction industry in Western Europe
According to the latest estimates by the Euroconstruct industry network and the ifo Institute, construction output in Europe grew by 2.0 percent in real terms in 2016. Development in Western Europe was positive with growth of 2.4 percent compared with 1.6 percent in the previous year. In Eastern Europe, construction output fell by 3.3 percent (previous year: +5.5 percent) as a result of lower European Union infrastructure projects. Ireland, Scandinavia and the Netherlands generated very strong growth. France’s construction industry expanded again after several years of contraction. Italy, Belgium and Austria saw a revival in growth. Stimuli for the European construction industry came primarily from residential construction with a 3.9 percent increase. New construction posted higher growth rates, and maintenance and modernisation likewise developed very spiritedly. In contrast, commercial construction grew only moderately, and civil engineering declined.
According to data from the German Federal Statistical Office, construction investment in Germany revived substantially in 2016 with real growth of 3.1 percent (previous year: 0.3 percent). According to the IfW, investment in residential and public-sector construction grew very strongly by 4.1 percent and 4.3 percent respectively. Only commercial construction saw a further slight decline of 0.5 percent.
According to estimates by the German Institute for Economic Research, the new residential construction volume increased by 11.2 percent to EUR 64.9 billion in 2016, while construction activity involving existing buildings (conversion, expansion and maintenance) increased by a very robust 3.1 percent to EUR 134.9 billion. Overall, the volume of residential construction increased by 5.6 percent. Commercial and public-sector construction grew again by 2.3 percent to EUR 91.6 billion in 2016 after stagnating in the previous year. Despite the strong revival in new construction, building construction as a whole continues to be dominated by the expansion, conversion, maintenance and modernisation of existing buildings. The volume of this construction is around twice as high as investment in new construction. According to the Association of the German Sanitary Industry and the ifo Institute, the sanitary industry posted its seventh consecutive increase in net sales in this environment.
Growth of around 3 percent to EUR 23.7 billion is expected to have been generated in 2016. In heating and air conditioning, the Federal Association of the German Heating Industry reports that modern surface heating and cooling systems in particular are continuing to catch on with sales growth of around 12 percent.
Asia’s construction industry still in the ascendant
In 2016, the Chinese construction industry climbed out of its two-year trough. According to the NBS, building investments increased by 3.2 percent in terms of floor space. Around two thirds of the investment volume were attributable to residential buildings, where moderate growth in floor space of 1.9 percent was achieved in new construction. Renovation and redevelopment work also increased. Office properties and commercial buildings also saw high investment growth with growth in floor space of 6.0 percent and 4.5 percent respectively.
After a dynamic start, the growth in Indian construction output slowed to less than 5 percent by the end of 2016. The construction industry was supported by high investment in infrastructure, including water management. Despite a significant housing shortage, there is only low demand for housing as property prices have been rising drastically for some time. The pressure on the property market therefore continued in 2016. In the first half of the year, 8.6 percent fewer homes were completed than in the same period of the previous year.
Korea’s construction industry experienced a powerful boom in 2016, fuelled by low interest rates and government construction projects. According to the central bank, construction investment increased by 10.5 percent in real terms (previous year: 3.9 percent).
In Southeast Asia, the construction industry continued to grow on a broad basis in 2016. This was driven by substantial investments in infrastructure in Thailand, Indonesia, Malaysia and the Philippines. Indonesian and Malaysian building construction were exceptions to this rule.
Russian construction now stabilised – Turkey with summer slump
The construction industry in Russia suffered in 2016 from weak domestic demand as a result of the recession, the strained public budget and the difficult financing conditions for private investments. According to Rosstat, the Russian Federal State Statistics Service, construction output fell in the first eleven months of 2016 by 4.3 percent, with a 6.5 percent decline in residential construction. At the end of the year, development stabilised at a low level. According to the Mechanical Engineering Industry Association (VDMA), civil engineering saw particularly sharp declines. In contrast, both building construction with regard to affordable housing and the market for heating, heat and water treatment technology were relatively stable. This development was supported by interest subsidies.
After initially robust development, the construction industry in Turkey weakened as a result of the attempted coup and the subsequent upheavals. According to the Turkish Statistical Institute (TurkStat), the real decline in construction output in the third quarter totalled 4.2 percent, with a 4.7 percent decline in building construction.
In the Middle East and North Africa, political and economic crises frequently cast a shadow over the construction industry. Positive exceptions included private building construction in the Lagos metropolitan area