Czech construction improved by seven places among EU countries

Prague - Czech construction had a year-on-year growth of 2.1 percent in the first quarter of this year, ranking 13th among 26 EU countries; data from Italy and Cyprus are not available. The Czech Republic improved by seven places compared to last year and by six positions compared to the end of last year. This is based on data from the European statistical office Eurostat. In the EU countries, construction declined by an average of 3.5 percent in the first quarter.

"In Czech construction, the inertia from previous years is fading. Inflexible construction laws in our country hampered construction during times of boom. Insufficient construction created a mismatch in the real estate market, leading to a sharp increase in prices. If property prices do not decrease significantly after the current crisis, completing unfinished projects will be lucrative. This could keep Czech construction above the EU average," said analyst Štěpán Křeček from BH Securities to ČTK.

The most significant increase in construction production in the first quarter was in Romania, at 34.1 percent. This was followed by Malta with a growth of 15.7 percent and Ireland, where construction rose year-on-year by 15.6 percent. Nineteen countries were above the EU average. Eleven EU countries recorded a decline, while three did so in the same period last year. In France, construction fell by 17.1 percent year-on-year, in Greece by 10.4 percent, and in Luxembourg by 8.7 percent.

"While construction was on the rise in the vast majority of EU countries last year, the trend changed rapidly in the first quarter of this year. However, unfinished projects are still being completed, and some countries maintained a high growth rate. In the future, part of the demand from the private sector could be replaced by demand from the public sector," Křeček added.

According to Czech Found analyst Lukáš Kovanda, the year-on-year growth in the Czech Republic could have been even more pronounced were it not for long-standing deficiencies in drawing European subsidies and a shortage of labor. "At the end of the quarter, there was also an outflow of foreign workers due to the outbreak of the coronavirus crisis. Nevertheless, Czech construction shows relatively high resilience against the crisis compared to key sectors of the economy," Kovanda added.

According to analyst Petr Bartoň from Natland, questions about the future health of the economy will first manifest in the actual construction output in the Czech Republic within a few months. "While Europe plans green investments and wants to use government spending to qualitatively shift economies toward modern technologies, our government spending is currently planned largely for concrete. However, a lack of demand is not currently troubling builders here. Our constructions are made more expensive due to increased administrative and time demands," Bartoň concluded.

Year-on-year change in construction performance in EU countries in Q1 2020:

Country	Index (in percent)
Romania	34.3
Malta	15.7
Ireland	15.6
Latvia	14.8
Lithuania	9.6
Estonia	7.3
Germany	7.2
Croatia	6.0
Poland	5.2
Finland	5.0
Slovakia	3.6
Slovenia	3.3
Czech Republic	2.1
Austria	1.8
Netherlands	1.1
Hungary	-0.1
Portugal	-1.2
United Kingdom	-1.9
Denmark	-2.7
Sweden	-3.6
Bulgaria	-4.4
Belgium	-6.3
Spain	-8.2
Luxembourg	-8.7
Greece	-10.4
France	-17.1
Italy	data not available
Cyprus	data not available
EU Average	-3.5

Source: Eurostat