THE OUTPUT of Slovak construction companies continues its decline. After consecutive shrinkage over all months of 2009, except in August when output increased by a mere 0.1 percent year-on-year, the downward trend continued in January 2010 with construction output recorded as 8.1 percent less than January 2009, at €257.5 million, the Slovak Statistics Office reported on March 9. The poor development is ascribed to low demand for almost all kinds of construction projects, financing limitations and unfavourable weather conditions as well as some other persisting effects from the financial crisis.
In January, construction activities carried out by companies in the domestic market decreased by 8 percent y-o-y to €251.3 million, making up 97.6 percent of the total monthly output. The output of Slovak construction companies undertaken abroad decreased by 10 percent y-o-y to €6.2 million.
After seasonal influences were adjusted, construction output in January was 3.3 percent lower than in December 2009.
“The construction sector keeps declining while the business of developers is registering the biggest decline,” said Dávid Dereník, a macro-analyst with UniCredit Bank in his commentary to the January statistics, adding that the number of new development projects with construction just starting can be counted ‘on one hand’. He wrote that the main reason for the decline in construction of buildings is the fact that a large volume of commercial real estate projects, which had been ordered before the crisis, were completed throughout 2009 and in the beginning of 2010.
Although highway construction showed a year-on-year increase of 17 percent in January, construction of buildings decreased by 12 percent in that month. Dereník said that construction of buildings is 24 percent below the pre-crisis level and that during the coming months he expects a continuation of the steep drop in output, as other projects are completed and new orders prove virtually non-existent.
Over the whole year, construction output shrank by 11.3 percent year-on-year in 2009 compared to a 12 percent increase in 2008. Total output in 2009 was €5.75 billion. Construction projects in the domestic market decreased by 11.1 percent y-o-y to €5.528 billion and projects undertaken by Slovak companies abroad decreased by 16.6 percent y-o-y to €222.1 million.
