Analysts: Interest rates and EU funds help the construction industry

Prague - The positive May results in construction are driven by low interest rates that support commercial residential construction. The influx of funds from public budgets and EU funds for construction projects is also significant. Economists agree on this, responding to today's statistical data.
Construction output in May increased year-on-year in constant prices by 11 percent after a decline of 2.9 percent in April. Compared to the previous month, construction output in May rose by 3.6 percent. However, the number of building permits issued in May decreased again year-on-year by 4.4 percent.
"Low interest rates and the availability of loans on one hand, concerns about higher VAT on the other - these are the main stimuli for residents' interest in new apartments," said Petr Dufek from ČSOB. This factor is very evident, according to him, in housing loans, which reached nearly 310 billion crowns by the end of May.
According to Dufek, a boom in projects co-financed by the European Union can also be expected. "It will depend only on the skill and agility of the applicants for the resources, which so far are primarily directed into infrastructure," he added.
The success of the construction sector is also indicated by the increase in the number of employees by nearly one percent, according to Markéta Šichtařová from Next Finance.
The following period is expected by analysts to be an excellent time for residential construction. "The second half of 2006 and the entire year of 2007 will literally be a golden period," Šichtařová stated. According to her, family houses will be built mainly around Prague, and a new trend will also be the construction of second homes in the form of summer apartments, cottages, and recreational cabins.
For the entire year, economists expect construction growth between four and six percent. "While in 2005 Czech construction improved by 4.2 percent, we expect a slight acceleration to six percent for this year," said Jan Vejmělek from Komerční banka. According to Dufek, this year construction output will achieve growth of about four to five percent. "However, the ability to draw funds from European funds represents both significant uncertainty and a great opportunity," he added.