Nordic construction and civil engineering market
Global financial growth
The global economy continued to strengthen in 2017. The political unrest that characterized the start of 2017 subsided after the French election in May as populist and protectionist currents did not win a stronghold in European politics, as previously feared. There were also positive financial statistics for the Euro zone that showed a clear increase in GNP growth and a continued decrease in unemployment. In Europe growth is expected to continue in 2018 and 2019 as the global economy grows. Growth is strong in the US and is expected to increase further in 2018 since the Republicans’ tax bill made it through Congress. Inflation tendencies continue to be weak in the Euro zone, while they have been apparent in the US. The Federal Reserve is expected to continue increasing interest rates and European Central Bank politics are also geared towards a normalization through lower buybacks of bonds. Despite an overall positive trend there is growing concern regarding the development of both stock markets and inflation.
The economy in Peab’s markets
Sweden
Swedish growth continued in 2017, albeit at a slower rate than in 2016. International growth has made the Swedish export industry an increasingly important engine in the economy and it has also benefited from the weak Swedish krona. Production development in businesses continued to be positive, in both industry and services. Capacity utilization in industry is back on 2008 levels, which has led to greater investment needs. Low interest rates, growing asset values on the stock market and rising employment have been beneficial for household consumption. The current risk is for greater instability in stock markets and Swedish housing prices. All in all, GNP growth in 2018 is expected to remain on the same level as 2017 with a somewhat receding increase in household consumption and net investments. On the other hand it looks as if industry production will gain further momentum.
Norway
Financial growth increased in 2017 mainly due to an increase in private consumption and rising net investments. Unemployment decreased and exports took off, stimulated by growing international demand. Inflation decreased which was beneficial for household consumption and despite falling housing prices households showed greater confidence in the economy. Exports and industrial investments are expected to continue to rise due to global financial growth. The previously hard hit oil sector began to bounce back in 2017 through improved profitability and swelling cash flows and this should mean that investments in the sector will pick up.
Finland
The Finnish economy showed strength in 2017 with GNP growth that is expected to have superseded three percent. The factors behind the financial recovery are the productivity improvements that have been made, including frozen wages, longer annual working hours and less public spending, as well as an increase in global and national demand. More activity in Finnish industry led to considerably higher investments and exports took a leap forward. The private consumption accelerated as well, although just marginally because small raises in wages hold consumption back even if consumer confidence is high. Many indications point to continued positive development in 2018 and the year after, but since household consumption will continue to be limited global development needs to continue to favor Finnish exports for this to happen.