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• Create Date April 4, 2023
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Construction Monitor March 2023

The economic growth outlook weakened considerably in March, as GDP growth estimates are revised lower. As underlying inflation remains persistent, the SARB raised the repo rate by 50 basis points, pushing the prime rate to 11.25 percent. The probability of an economic recession is becoming an almost certainty, but can the local construction sector mitigate the decline and provide counter cyclical support to an otherwise ailing economy? Several indicators suggest that it can, but there is a significant difference between the building industry and the civil industry, often grouped together as the construction sector. The fortunes of these two sectors however can be very different, as the building industry is predominately private sector funded (sensitive to GDP growth, investor confidence and lending rates) while the civil sector relies predominantly on government funded projects, or government "approved" projects, where policy certainty, state of government finances and state capability to implement projects, plays a key role. Challenges remain in both these sectors, but there are some evidence that the sector may have reached a lower turning point.

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