Czech construction ranked 18th in the EU in the first quarter based on performance

Prague - Czech construction industry was ranked 18th among 25 European Union countries in the first quarter with a year-on-year decline of 5.4 percent; data from Italy and Cyprus are not available. Year-on-year, the Czech Republic fell five places and compared to the end of last year, it declined by one position. This was calculated by ČTK based on data from the European statistical office Eurostat. In EU countries, construction grew on average by 2.2 percent in the first quarter.

"The numbers show that the pandemic had a more severe impact on the construction industry in the Czech Republic than on average in EU countries. Thus, the performance of the Czech construction industry continues to worsen in the context of the situation in the EU. However, this deterioration is partially a result of a statistical effect of the comparative base. Last year in the first quarter, domestic construction did not fully feel the blow of the pandemic situation. That only happened in subsequent quarters. Therefore, in the second to fourth quarters this year, the year-on-year decline in construction should not be as pronounced for this reason," said Trinity Bank analyst Lukáš Kovanda to ČTK.

Construction in the first quarter grew year-on-year in eight countries. The most in France (by 13 percent), Luxembourg (by 10.2 percent), and Croatia (by 8.6 percent). Conversely, it fell the most in Ireland (by 26.8 percent), Poland (by 12.7 percent), and Latvia (by 12.3 percent).

"The first quarter of the year is an off-season for construction in Central and Northern Europe, which complicates comparisons. However, with this caveat, it seems that construction was not a strong point for most economies. The result is not entirely surprising, considering all the supply-side restrictions that we have references for, such as disruptions in material supplies and labor shortages. As for the Czech Republic, the inadequate supply has been more of a brake than demand," added UniCredit Bank analyst Pavel Sobíšek.

According to BH Securities analyst Štěpán Křeček, the Czech construction industry is trapped in bureaucracy. As he stated, despite strong demand for new properties, insufficient construction regulations are preventing the construction of a sufficient number of houses and apartments. "Moreover, the supply of construction materials is beginning to fail, which will significantly increase the cost of construction. The Czech construction industry is also vulnerable due to labor shortages. Some foreign workers returned to their home countries during the coronavirus times, and Czechs are not rushing to fill their places," Křeček added.

The reduction of bureaucracy and a significant acceleration and simplification of the construction process could come from a new construction law that has been approved by the Chamber of Deputies and is now being discussed by the Senate. However, the law has many critics.

Year-on-year change in construction performance in EU countries in Q1 2021 (in percent):
France	13.0
Luxembourg	10.2
Croatia	8.6
Austria	7.8
Belgium	6.9
Denmark	6.6
Malta	6.1
Romania	0.3
Bulgaria	-0.1
Portugal	-1.3
Sweden	-1.3
Netherlands	-1.6
Hungary	-2.0
Slovenia	-3.7
Finland	-3.8
Lithuania	-4.0
Germany	-4.7
Czech Republic	-5.4
Greece	-5.5
Estonia	-6.7
Spain	-10.3
Slovakia	-11.6
Latvia	-12.3
Poland	-12.7
Ireland	-26.8
EU Average	2.2

Source: Eurostat