Russia: waiting for a thaw

Published 29 March 2016

In the face of considerable economic headwinds, Russia’s construction industry has seen its growth decelerate as public and private investors cut back on spending. Russia’s cement demand freeze is not expected to thaw in the next few years and given recent upgrades, substantial overcapacity appears to be just around the corner. By Vitalie Iambla, PMR.

A review of recent trends in Russian construction activity and the impact on the domestic cement sector

In recent years the Russian construction industry has witnessed a considerable deceleration of growth. Preliminary data reveals that construction output collapsed by seven per cent YoY in 2015, following the 2.3 per cent contraction seen a year earlier and a negligible 0.1 per cent improvement in 2013.
The key factor in this decline has been the poor economic performance. GDP growth fell to 0.6 per cent in 2014 from 1.3 per cent a year earlier. In 2015 the contraction in GDP accelerated to 3.7 per cent.

Moreover, subdued construction activity, a deteriorating fund-raising environment, political tensions with developed countries and worsening economic growth forecasts contributed to a drop in fixed capital investments of more than eight per cent in 2015.

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