South Africa’s economy grew 1.3 percent in 2017, after a wobbly first quarter which saw the economy shrink. At the final count growth exceeded earlier expectations. Mining, an important sector in the economy, started to bounce back in 2017, largely due to a resurgence in some commodity prices and a weaker currency against the USD.
Construction spending has been affected by slow economic growth. The residential market is flat, and the commercial market is oversupplied, suggesting a lag in activity even as the economy picks up.
But the government is keen to meet the demand for housing from the country’s lower and middle-income groups by building 1.6 million affordable homes by 2019. The government is also intent on boosting renewable energy and transport infrastructure. It is estimated that the government will spend USD71.6bn on the construction and modernisation of infrastructure, with USD24.2bn invested in transport and logistics and USD9.9bn in water and sanitation.
Among the major schemes are the expansion of the
manganese export terminal at the Port of Ngqura and
the proposed Johannesburg to Durban high-speed rail link.
|Market:||Staying the same|
|Cost escalation 2017–18:||6.2%|
|Cost escalation 2018–19:||6.0%|
|Location factor (USD):||55.1|
Construction spending has suffered due to negative investor sentiment and slow economic growth. But the government’s intention to invest in infrastructure and low-cost housing should support construction. The uncertainty over the nation’s presidency had unsettled confidence. The resolution brings more certainty, but business is likely to remain watchful as the new president shapes policy.
This content is part of the International construction market survey 2018