Can the construction industry leave recent challenges behind?

Modest growth is predicted for the short term

The global construction industry has experienced a few turbulent years, as was seen in the rise of insolvencies. However, the tide is now turning and most indicators are pointing to growth over the next few years. In our recent report on Global Construction Industry Trends, our sector specialists look at the main issues and opportunities affecting the industry in their regions.

What is the construction industry outlook in the Americas?

My colleague Matt Nathan, Underwriter Atradius USA, noted that improvements in the   economy were helping to support the industry in the US. He said: as the interest rates come down and mortgage rates with it, the outlook for the medium term is improving.” 

He reserved a note of caution for the residential solar segment in the USA which is currently adjusting to major changes in regulations and incentives, which could result in an uptick in insolvencies in this subsector.

Will Asia Pacific retain its position as global powerhouse of the construction industry?

Although Asia accounts for 45% of the world’s construction output, some major markets have struggled recently. As our local sector specialists, Mon Razak, Senior Underwriter Atradius Australia, and Shane Tan, Associate Senior Underwriter Atradius Asia, write in the report the industry in both Australia and China has struggled recently. 

Construction companies accounted for more than a quarter of business insolvencies in Australia last year. Mon said: “The residential segment is the most vulnerable, but we see insolvencies in all of the subsectors.” The property sector in China has suffered from several difficult years and investment in the industry is still decreasing. Shane noted: The turmoil in the property sector is still ongoing after investment decreased 9.6% in 2023.”

However, urbanisation in emerging Asia is helping to drive industry growth across the wider region, helping it to retain its position as ‘industry powerhouse’. Government infrastructure projects are also supporting modest growth in both China and Australia.

Has credit risk for the construction industry increased in Europe?

Leon Barendsma, Manager Risk Services Atradius Netherlands confirms that the credit risk has increased for most major European markets as the industry grapples with “the lingering impact of tight monetary policies and only a modest economic recovery.”

However, he also points to a modest rebound in 2025 and 2026 as the industry gains momentum amid interest rate cuts and green transformation projects.

What are the primary opportunities and challenges facing the global construction industry?

The major challenges affecting the construction industry globally are the cost of materials and labour shortages. The cost of materials largely remains higher than before the recent spike in inflation. Labour shortages vary greatly based on geographical regions. In East Asia (with the exception of Japan) there is no significant problem with finding construction workers. However, the same cannot be said for many advanced markets including Japan, Australia, Europe and the USA. Here serious labour shortages are impacting everything from profit margins to delivery deadlines.

Industry opportunities include government investment in green infrastructure projects and the potential that new technology presents to tackle issues. These include technology such as resource allocation software and off-site fabrication which could be used to address issues such as labour shortages.

The appetite and ability to maximise such opportunities will inevitably vary across regions, markets and individual businesses. My colleagues in the different regions explore these in more detail in their Construction Outlook Report.

Download our Construction Outlook 2025 report 

Christian Bürger, Senior Advisor Atradius