Belgium

Overall construction activity

Overall, construction grew by 6.6% in 2021, more than offsetting the 4.5% decline recorded in 2020. Excluding stimulus-related work and repairs to the extensive flood damage in the summer of 2021 and the effects of the war in Ukraine, construction is expected to continue to grow and gain 1.9% in 2022.

 

The impact of the work related to the recovery plan and the repair of damage will depend on the timing of this work, which is slow to start. Given the importance of this work, it could support growth by 1.5 to 3 percentage points.

 

The impact of the Ukrainian crisis also remains highly uncertain. Early estimates indicate that it would reduce overall economic growth by less than one percent. But the impact on construction could be greater, given the extent to which the outbreak of the crisis has affected the confidence of households, which are important customers for construction. And also given its impact on the cost of materials and therefore construction. According to a survey by the NBB, companies in the sector expect their activities to fall by around 5% within a year. This would correspond more or less to a decline of 2.5% for the whole of 2022.

 

The scenario excluding the stimulus package, flooding and the impact of the war thus appears to be a central scenario against which the main positive and negative risks are fairly well balanced.

Housebuilding

New housing construction activity has done better than rebound in 2021. Thanks to very strong growth (+10.1%), it has more than made up for the significant 6.7% decline recorded in 2020.  It is expected to rise by a few more percent in 2022, particularly given the sharp increase in the number of homes authorized in 2021 and whose construction is due to be completed or even started in 2022. The question is, however, to what extent the consequences of the war in Ukraine will affect the re-supply of demand or even the start of new housing already authorized.

 

Activity in the housing renovation sector, which against all expectations grew by 2% in 2020, continues to grow despite the health crisis. It has thus gained 4.5% in 2021 and is expected to grow by at least another 1.5% in 2022. The  timid start of the stimulus plans should allow it to progress more (a major component of those plans is indeed) dedicated to energy renovation of housing. And the same is true for reconstruction work. Conversely, the consequences of the Ukrainian war could slow down demand for renovation work not aimed at improving energy performance. The consequences of this war on energy prices should, in principle, be of a completely different nature for energy renovation, for which demand could be (strongly) reinforced.