Safcec expects marginal construction recovery

27 March 2014

The South African civil construction industry experienced a “mixed bag” of business conditions in 2013, with industry turnover for the 12 months contracting by 5% to R38.9-billion, the South African Forum of Civil Engineering Contractors (Safcec), Engineering News Reports.

The organisation revealed in its State of the South African Civil Industry Report that, although budgetary allocations towards public infrastructure for the next three years were not reduced in the 2014/15 Budget, projected expenditure would be “barely enough” to cater for higher construction costs over the period.

Nominal growth in total public sector infrastructure was expected to increase by 8.1% in 2014/15 and 5.4% in 2015/16 but fall by 0.3% in 2016/17, totalling R847-billion over the medium-term expenditure framework.

“Thus in real terms, total infrastructure expenditure is likely to contract over the next three years. The contribution of infrastructure spending by State-owned enterprises (SOEs) as a percentage of total public infrastructure expenditure will soften in the next three years to 43%, mainly owing to a slowdown in energy infrastructure expenditure,” the report stated.

The underlying trend had, however, started to show some improvement, suggesting that conditions were not deteriorating any further.

“We expect the industry to show a marginal recovery in 2014, increasing by between 3% and 5% in real terms, supported by higher real growth in infrastructure expenditure by government and a marginal increase in expenditure by SOEs,” noted the report.

By: Natalie Greve

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