Slide 1: Economic Outlook
ECONOMIC OUTLOOK Skøyen 15 September 2015 Rolf Albriktsen Kristoffer Eide Hoen
Slide 2: Highlights
HIGHLIGHTS Norway: Slower growth ahead • Moderate forecasts for building construction, high activity in civil engineering • Increasing regional differences Sweden: High levels of activity in the markets • Growth driven by residential buildings Denmark: Upturn in the economy • The construction sector
Slide 3: The Economy
Photo: Creative Commons/whiz-ka THE ECONOMY
Slide 4: Global Economy
GLOBAL ECONOMY GDP GROWTH 2014–2016 HIGHLIGHTS GDP growth (%) 2014 2015 2016 Stock market turbulence and signs of weaker growth in China Euro zone 0.8 1.5 1.7 • However, growth forecasts remain positive Germany 1.6 1.6 1.7 Commodity prices will remain low for some time United Kingdom 2.9 2.4 2.2 Zer
Slide 5: International Economies
INTERNATIONAL ECONOMIES GDP GROWTH 2014–2016 HIGHLIGHTS Stock market turbulence and signs of weaker growth in China • However, growth forecasts remain positive Commodity prices will remain low for some time Zero growth in the European construction sector in the last four quarters • Wide differences
Slide 6: Construction market Q2 2014 - Q2 2015
Level of Level as % production in Q2 of 2010 Construction market 2015 figures Q2 2014 - Q2 2015 EU 94 Germany 107 UK 103 France 88 Italy 68 Spain 91 Poland 103 Finland 106 Sweden 116 Denmark 112 Norway 124 Source: Eurostat
Slide 7: Moderate Growth in the Norwegian Economy
MODERATE GROWTH IN THE NORWEGIAN ECONOMY GROWTH FORECASTS FOR NORWAY HIGHLIGHTS A period of more moderate economic growth • The GDP for mainland Norway is predicted to rise by roughly 1–1.5% in 2015 and 2016 • Continuing low interest rates, with further cuts expected Increased investment from the pu
Slide 8: Moderate Growth in the Norwegian Economy
MODERATE GROWTH IN THE NORWEGIAN ECONOMY GROWTH FORECASTS FOR NORWAY HIGHLIGHTS A period of more moderate economic growth • The GDP for mainland Norway is predicted to rise by roughly 1–1.5% in 2015 and 2016 • Continuing low interest rates, with further cuts expected Increased investment from the pu
Slide 9: Offshore and onshore employees in petroleum activity
Bosatte offshoreansatte og landansatte i direkte og indirekte virksomhet, totalt og i forhold til bosatte sysselsatte m Indirekte sysselsetting ™ Leveranderansatte eksport ®™ Leverandoransatte hjemmemarked ™ Operatorselskapsansatte Offshoreansatte bosatt 9 15.09.2015 Figur 4: Ansatte i petroleumsvir
Slide 10: Heading for an Upturn
HEADING FOR AN UPTURN GROWTH FORECASTS FOR SWEDEN HIGHLIGHTS GDP growth is high, as expected: • Growth rate of 2.5–3% this year and next year • Record-low interest rates Positive development for households • Improvements in the employment market • Good growth in incomes and consumption • Households'
Slide 11: Growth from a Low Level
GROWTH FROM A LOW LEVEL GROWTH FORECASTS FOR DENMARK HIGHLIGHTS The economic outlook is brighter than for many years • GDP growth of 2% in 2015, may rise to 2.5% in 2016. • House prices picking up in metropolitan areas May counteract imbalances in the wake of the financial crisis • Housing wealth vs
Slide 12: Norwegian Construction Market: Moderate Forecasts, Regional Differences
Veidekke's new HQ in Skøyen NORWEGIAN CONSTRUCTION MARKET: MODERATE FORECASTS, REGIONAL DIFFERENCES
Slide 13: Increasing Production
INCREASING PRODUCTION PRODUCTION INDEX FOR CONSTRUCTION HIGHLIGHTS The production index rose by 1% in Q2 • 1.5% more than in the same quarter in 2014 Civil engineering: Production picked up sharply this year • Up 5.2% from Q1 to Q2 Building construction: Stable activity for residential and non-resid
Slide 14: New Residential and Civil Engineering Projects
NEW RESIDENTIAL AND CIVIL ENGINEERING PROJECTS CONTINUED GOOD INFLOW OF NEW ORDERS 14
Slide 15: The Residential Market: House Prices Rose More Than Expected
THE RESIDENTIAL MARKET: HOUSE PRICES ROSE MORE THAN EXPECTED HOUSE PRICES HIGHLIGHTS The residential market is still dominated by rising prices and stable sales • Low interest rates and good access to credit • People moving to metropolitan areas In August the price of existing apartments was around
Slide 16: Weaker Market in Rogaland
WEAKER MARKET IN ROGALAND DECLINING DEMAND FOR RESIDENTIAL BUILDINGS AND PRIVATE NON-RESIDENTIAL BUILDINGS IN ROGALAND 16
Slide 17: The Residential Market: Increasing Regional Differences
THE RESIDENTIAL MARKET: INCREASING REGIONAL DIFFERENCES HOUSE PRICES AND TRENDS HIGHLIGHTS Continued good growth in prices in the Oslo and Bergen metropolitan areas • Days on the Market (DOM) stable The situation in oil-dependent areas is pulling the residential market down • Homes taking longer to
Slide 18: The Residential Market: Housing Starts
THE RESIDENTIAL MARKET: HOUSING STARTS REGISTERED RESIDENTIAL BUILDING PERMITS HIGHLIGHTS Strong growth in the number of housing starts in the first half of the year • Good housing sales through the winter this year • Work has started on projects that were put on ice in 2013–2014 We expect a flatter
Slide 19: Regional Differences in Housing Starts
REGIONAL DIFFERENCES IN HOUSING STARTS 19
Slide 20: Slower Growth Within Non-Residential Buildings
SLOWER GROWTH WITHIN NON-RESIDENTIAL BUILDINGS REGISTERED NON-RESIDENTIAL BUILDING PERMITS HIGHLIGHTS Start-up of non-residential buildings has been declining • A growing number of new public building projects will stabilise start-up figures • Construction projects for oil-related industries will fa
Slide 21: Civil Engineering
CIVIL ENGINEERING INVESTMENTS IN CIVIL ENGINEERING (VOLUME 2011 PRICES) HIGHLIGHTS 5% growth in the civil engineering market Mrd. NOK 35 this year and next year 30 +3%* • Transport continues to lead the growth in civil 25 20 engineering 15 +4%* • The growth within municipal infrastructure will +7%*
Slide 22: Examples of Major Projects
EXAMPLES OF MAJOR E10 Evenes – Sortland (NOK 3,000 mill.) PROJECTS E6 Helgeland Sør (NOK 3,000 mill.) A number of major transport infrastructure Fv714 Laksevegen (NOK 600 mill.) projects will come up for tender in 2015–2016 Fv659 Nordøyvegen (NOK 600 mill.) Relevant projects (worth more than NOK 500
Slide 23: Construction Markets in Norway Summary
CONSTRUCTION MARKETS IN NORWAY SUMMARY INVESTMENTS IN CONSTRUCTION (VOLUME 2011 PRICES) HIGHLIGHTS Continued high levels of activity in the construction and civil engineering market in 2015 and 2016 • Growth of around 2% in the total market Residential investments to rise by approx. 2% p.a. Private
Slide 24: Swedish Construction Market: High Levels of Activity
Brf Hovås Park, Gothenburg SWEDISH CONSTRUCTION MARKET HIGH LEVELS OF ACTIVITY
Slide 25: Construction Companies' Confidence Indicator
CONSTRUCTION COMPANIES' CONFIDENCE INDICATOR 25
Slide 26: Healthy Residential Market
HEALTHY RESIDENTIAL MARKET HOUSING STARTS HIGHLIGHTS Healthy market development so far in 2015 • The start-up rate has passed 40,000 units Price growth has picked up in the cities Positive underlying driving forces • Improvements in the labour market • Low interest rates – greater purchasing power G
Slide 27: Healthy Residential Market
HEALTHY RESIDENTIAL MARKET HOUSE PRICES AND FORECASTS HIGHLIGHTS Healthy market development so far in 2015 • The start-up rate has passed 40,000 units Price growth has picked up in the cities Positive underlying driving forces • Improvements in the labour market • Low interest rates – greater purcha
Slide 28: Healthy Residential Market
HEALTHY RESIDENTIAL MARKET POPULATION. ANNUAL GROWTH (%) HIGHLIGHTS Healthy market development so far in 2015 • The start-up rate has passed 40,000 units Price growth has picked up in the cities Positive underlying driving forces • Improvements in the labour market • Low interest rates – greater pur
Slide 29: Healthy Residential Market
HEALTHY RESIDENTIAL MARKET THE COST OF BUYING A HOME HIGHLIGHTS Healthy market development so far in 2015 • The start-up rate has passed 40,000 units Price growth has picked up in the cities Positive underlying driving forces • Improvements in the labour market • Low interest rates – greater purchas
Slide 30: Healthy Residential Market
HEALTHY RESIDENTIAL MARKET THE COST OF BUYING A HOME HIGHLIGHTS Healthy market development so far in 2015 • The start-up rate has passed 40,000 units Price growth has picked up in the cities Positive underlying driving forces • Improvements in the labour market • Low interest rates – greater purchas
Slide 31: Progress for Private Non-Residential Buildings
PROGRESS FOR PRIVATE NON-RESIDENTIAL BUILDINGS HIGHLIGHTS Moderately positive market development in 2015 • Investment figures show +4% in H1 2015, compared with H1 2014 • Industrial investment estimates for 2015 show solid growth • However this trend is not reflected in the number of projects starte
Slide 32: Progress for Private Non-Residential Buildings
PROGRESS FOR PRIVATE NON-RESIDENTIAL BUILDINGS INVESTMENTS IN CONSTRUCTION AND CIVIL ENGINEERING FOR A HIGHLIGHTS SAMPLE OF INDUSTRIES Estimate from May Moderately positive market development in 2015 2014 2015 Diff. % • Investment figures show +4% in H1 2015, compared with H1 the same year 2014 Indu
Slide 33: Progress for Private Non-Residential Buildings
PROGRESS FOR PRIVATE NON-RESIDENTIAL BUILDINGS BUILDING PERMITS FOR PRIVATE NON-RESIDENTIAL BUILDINGS HIGHLIGHTS Moderately positive market development in 2015 • Investment figures show +4% in H1 2015, compared with H1 2014 • Industrial investment estimates for 2015 show solid growth • However this
Slide 34: Progress for Private Non-Residential Buildings
PROGRESS FOR PRIVATE NON-RESIDENTIAL BUILDINGS LABOUR MARKET HIGHLIGHTS Moderately positive market development in 2015 • Investment figures show +4% in H1 2015, compared with H1 2014 • Industrial investment estimates for 2015 show solid growth • However this trend is not reflected in the number of p
Slide 35: Progress for Private Non-Residential Buildings
PROGRESS FOR PRIVATE NON-RESIDENTIAL BUILDINGS LABOUR MARKET HIGHLIGHTS Moderately positive market development in 2015 • Investment figures show +4% in H1 2015, compared with H1 2014 • Industrial investment estimates for 2015 show solid growth • …However this trend is not reflected in the number of
Slide 36: Public Non-Residential Buildings More Moderate
PUBLIC NON-RESIDENTIAL BUILDINGS MORE MODERATE BUILDING PERMITS – PUBLIC NON-RESIDENTIAL BUILDINGS HIGHLIGHTS The predicted decline seems to be under way • Decrease in building permits in H1 2015 • Investments in H1 2015 -4% Weak starting point for the rest of 2015 and 2016 • An extended period of g
Slide 37: The Civil Engineering Market
THE CIVIL ENGINEERING MARKET INVESTMENTS IN CIVIL ENGINEERING (VOLUME 2011 PRICES) HIGHLIGHTS Positive market development in civil engineering in 2015 • Investment growth of 5% in H1 2015, compared with H1 2014 • Railway and power are positive drivers, road construction down Moderate forecast for ci
Slide 38: The Civil Engineering Market
THE CIVIL ENGINEERING MARKET INVESTMENTS IN CIVIL ENGINEERING (VOLUME 2011 PRICES) HIGHLIGHTS Positive market development in civil engineering in 2015 • Investment growth of 5% in H1 2015, compared with H1 2014 • Railway and power are positive drivers, road construction down Moderate forecast for ci
Slide 39: The Civil Engineering Market
THE CIVIL ENGINEERING MARKET INVESTMENTS IN CIVIL ENGINEERING (VOLUME 2011 PRICES) HIGHLIGHTS Positive market development in civil engineering in 2015 • Investment growth of 5% in H1 2015, compared with H1 2014 • Railway and power are positive drivers, road construction down Moderate forecast for ci
Slide 40: Construction Markets in Sweden Summary
CONSTRUCTION MARKETS IN SWEDEN SUMMARY INVESTMENTS IN CONSTRUCTION (VOLUME 2011 PRICES) HIGHLIGHTS Swedish market expected to remain strong throughout the forecast period • Investment growth of 7% in 2015 and 3% in 2016 The private sector is the main driver in 2015–2016 • Residential market +9% • Pr
Slide 41: Danish Construction Market: Construction Sector Remains Weak
Frederiksberg Centret DANISH CONSTRUCTION MARKET CONSTRUCTION SECTOR REMAINS WEAK
Slide 42: Private Non-Residential Buildings – Growth from a Low Level
PRIVATE NON-RESIDENTIAL BUILDINGS – GROWTH FROM A LOW LEVEL PRIVATE NON-RESIDENTIAL BUILDINGS HIGHLIGHTS The general economic recovery has not yet impacted construction and civil engineering The decline is continuing in the market for private non- residential buildings • Still a high level of vacanc
Slide 43: Denmark – Construction Sector Remains Weak
DENMARK – CONSTRUCTION SECTOR REMAINS WEAK INVESTMENTS IN CONSTRUCTION. FIXED PRICES (DKK) HIGHLIGHTS Still some markets with very low activity The private segment is expected to pick up slightly in 2016 due to a general improvement in the economy • Forecast for 2015 adjusted down due to weak perfor
Slide 44: Summary
SUMMARY
Slide 45: Scandinavian Construction Market Towards 2016
SCANDINAVIAN CONSTRUCTION MARKET TOWARDS 2016 Investments in construction, NOK billion* 2011 prices (volume) 350 +5%** 300 +2%** 250 200 150 +2%** 100 50 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2015f 2016f 2014e Source: Veidekke, Statistics Sweden, Statistics Denmark an
Slide 46: Appendix
APPENDIX
Slide 47: Forecasts
FORECASTS Level 2013 2014 2015 2016 Growth BNOK Growth Growth Growth rate 15–16 Residential 114 -5% 3% 1% 2% Private non-res. 50 5% -2% -1% -2% Public non-res. 25 5% 3% 3% 3% Civil engineering 59 6% 6% 5% 5% Constr. total 248 1% 3% 2% 2% 2013 2014 2015 2016 Number of units 29 000 27 000 30 000 27 00
Slide 48: Forecasts
FORECASTS Level 2014 2015 2016 Growth BSEK 2013 Growth Growth Growth rate 15–16 Residential 97 20% 15% 3% 9% Private non-res. 73 12% 5% 7% 6% Public non-res. 32 13% 0% -5% -3% Civil engineering 67 7% 2% 1% 1% Constr. total 269 14% 7% 3% 5% 2013 2014 2015 2016 Number of units 30 000 39 000 40 000 40
Slide 49: Forecasts
FORECASTS Level 2013 2014 2015 2016 Growth BDKK Growth Growth Growth rate 15–16 Residential 47 9% 0% 10% 5% Private non-res. 17 -4% 0% 10% 5% Public non-res. 17 -3% -5% 0% -3% Civil 32 8% -5% 0% -3% engineering Constr. total 112 5% -2% 6% 2% Legend: Unchanged forecast Adjusted down / up Source: Stat