Russian construction market: upturn in 2016

Over the past three years, the Russian construction market has seen a sharp slowdown. According to a report by PMR Publications based on the latest data released by Rosstat (Russia's national statistics institute), after good performance in 2012 (+2.5% year on year), construction output grew by only 0.1% in 2013 (although preliminary data pointed to a downturn of 1.5%). This negative trend continued into 2014, resulting in a contraction of 4.8% over the first 11 months of the year.

According to PMR, this recession has been driven by three main factors: firstly, the Russian economy as a whole, which saw GDP growth of just 1.3% in 2013 (a marked slowdown compared with the figure of 3.4% in 2012) and an even more modest +0.6 in 2014; secondly, lower levels of fixed capital investment, which fell by 0.2% in 2013 compared with the previous year, with a further drastic drop of 2.8% in the first 11 months of 2014; and lastly, the sanctions against the Russian government as a result of the tensions in Ukraine.

PMR's medium- to long-term forecasts for the entire Russian construction market are optimistic. While 2015 is expected to remain in negative territory (-0.8%), due to the continued effects of political uncertainty and lack of investment, 2016 should mark a return to positive growth (+2.4). The main drivers of this upturn are the numerous multibillion-rouble public projects aimed at expanding and modernizing the country's infrastructure, and building affordable housing.

For more information on the trend of civil engineering, residential and non-residential sectors read online the article published in Brick World Review 1/2015 or download the pdf version.