Kuba: The state will not be a driving force in construction in the coming years

Prague - The state will continue to save in the coming years, so public investments will definitely not become the engine of new growth in domestic construction. This was stated by Minister of Industry and Trade Martin Kuba in the quarterly analysis of Czech construction prepared by CEEC Research in cooperation with KPMG Czech Republic. The study was presented today by contractors at a meeting of leaders in the domestic construction sector.
     "One of the solutions that could significantly help the construction sector was the reallocation of European projects from so-called soft, snack-type projects to hard projects, specifically infrastructure," stated the head of the Ministry. However, this plan cannot be realized, as, according to Kuba, it has not found understanding with the European Commission. According to the minister, builders must therefore rely solely on private demand.
     The cuts in state investments in transportation construction, housing development, and the environment have been criticized by the president of the Union of Entrepreneurs in Construction, Václav Matyáš. "We expect a response from the government on questions about what growth-promoting measures are being prepared, where they will be directed, when they will be initiated, and what specific benefits they will bring for construction," the head of the union told ČTK.
     Two out of three Czech construction companies expect a decline in revenues this year due to the downturn in the sector. The darkest outlook comes from representatives of companies in civil engineering, which largely depends on investments from the public sector. A return to revenue growth is unlikely even in 2013; however, revenues should stop falling.
     The decline in the sector for the entire year of 2012 is estimated by construction company directors at 6.9 percent. The construction sector is not expected to return to positive figures next year either, although the forecasts for 2013 have slightly improved.
     "We do not expect that Czech construction will return to pre-crisis levels in the coming years," said construction expert Pavel Kliment from KPMG CR.
     Due to the decreased performance of the sector, construction managers expect that the number of construction companies will decline by 12 percent this year. Mainly smaller and medium-sized firms will disappear from the market.