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Australian economy to depend on construction sector

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The local construction industry will play a vital role in helping Australia's economy weather one of its weakest periods in recent times, according to a new report.

BIS Shrapnel's Long Term Forecast 2014 - 2029 report, released at the end of last month, reveals that the domestic economy is on course for its weakest four-year period since the recession in the 1990s. According to BIS Shrapnel, this is due to a range of factors, including declining investment in mining and a "stubbornly high dollar".

With mining investment having passed its peak and "the next structural shift" 12 to 18 months away, BIS Shrapnel expects the national economy to rely heavily on two sectors for the short term at least - exports and housing.

"The long-awaited recovery in dwelling investment is now entrenched," BIS Shrapnel stated in a press release.

"Having been delayed due to weak housing market sentiment and excessive caution by investors, the expectation of low interest rates for an extended period, combined with a substantial deficiency of residential stock, is driving a solid increase in dwellings building."

While many will bank on residential building to lead the way, other construction sub-sectors are ready to contribute as well. For example, the report expects private non-dwelling construction to also record growth, while major retail, warehouse and accommodation projects will also prove valuable over the next several years.

With BIS Shrapnel expecting a tough few years in store for Australia, it will be up to the construction industry to fuel a substantial portion of overall economic growth in the short term. Thanks to modern tools such as investment appraisal software, investors and others in the sector can play a pivotal role in contributing to growth.

Date Published: 19 Sep 2014
Category: General News

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