Construction Sector Expects Slowdown and Cost Increase

The Russian-Ukrainian war is also putting the construction industry in Hungary in a difficult situation, raising prices for domestic construction materials and making it impossible to import products, and slowing down construction work, according to the results of a recent sectoral economic survey.

The President of the National Association of Construction Contractors (ÉVOSZ), László Koji, is quoted by the business news site napi.hu that the survey predicts, among other things, a HUN 500 billion drop in public orders, a drop in profitability and an increase in chain debts.

Despite the COVID-19 epidemic, more than three quarters of businesses in 2021 saw their turnover increase compared to the previous year. 10% of them had no change and only 14% said that their turnover decreased in 2021 compared to 2020, according to the recent business survey commissioned by ÉVOSZ. Overall, the production value of HUF 5,389 billion in 2021 is 13% higher than in 2020, with all subsectors growing.

At the beginning of this year, the trade association forecast a 5-6% increase in production, but in the light of the Russian-Ukrainian war, it now expects stagnation. A significant drop in government orders of around EUR 500 billion is expected.

Residential orders are also expected to stagnate. Housing construction and renovation volumes are not expected to fall for the time being as a result of price increases. According to ÉVOSZ, private sector investment in industry, agriculture and logistics is likely to generate more orders in 2022.

In 2021, the average profitability of the sector was around 12% of turnover, while in 2022, almost half of the firms expect a decline, with only 17% expecting an improvement.

Growth is expected in domestic private orders. Construction firms do not expect steady contract awards in 2022.