Portugal

Overall construction activity

After the unprecedented drop of 8,4% suffered by GDP in 2020, Portuguese economy recovered and grew 4,8% in 2021.

In 2021 all components of GDP experienced positive evolution with emphasis on the strong recovery in domestic demand, which accounted for 65% of GDP growth (in percentage points and net of imports) throughout 2021.

Private consumption grew 5.0% in 2021, after a drop, unprecedented in recent decades, of 7.1% in real terms, in the previous year. Gross Fixed Capital Formation (GFCF) recovered from the 2.7% drop suffered in 2020, growing 4.9% in 2021, resulting from a strong recovery in the investment in machinery and transport material, but also from the positive behavior of construction investment. According to the National Institute of Statistics (INE) Quarterly National Accounts, these two components grew, in real terms and until September 2021, +10.4% and +2.1%, respectively.

Concerning external demand, the recovery was also notable, although still insufficient to compensate the huge negative impact suffered in 2020. Thus, after a drop of 18.6% recorded in 2020, overseas sales grew 9.6% in 2021. The increase in the imports volume was more significant, +10.3%, after a decrease of 12.1%, in real terms, in the previous year.

According to Banco de Portugal´s forecasts, the Portuguese economy is expected to continue to grow in the coming years, albeit moderately. Thus, Banco de Portugal anticipates GDP growth of +5.8% in 2022, +3.1% in 2023 and +2.0% in 2024. 

In line with positive GDP developments, the labor market experienced favorable developments throughout 2021, with growth in total employment (+2,7%) and a reduction in the unemployment rate from 7,0% to 6,6% from 2020 to 2021.

Regarding prices, there was, in 2021, an increase of 1,3% in the consumer price index.

Following FEPICOP´s estimates, construction sector production grew, in real terms, 4,3% in 2021.

In 2021, likewise in the previous year, the Construction sector demonstrated a high resilience to the constraints caused by the Covid-19 pandemic, with companies ensuring a high level of production. 

After a long recession period that began in 2002 and lasted until 2016, the construction sector's production has been growing since 2017 and has been accompanied by an increase in the number of construction workers, from 290.000 (on average) in 2016, to 305.400 workers (on average) in 2021. Facing 2020, the construction employment grew 2.8%, above the total employment of the economy, which increased 2.7%.

As a result of the increase in construction employment along 2021, there was a reduction in the unemployment from the construction sector, higher than that recorded for total unemployment (-15,4% and -14,2% respectively).

At the end of December and according to the data provided by the Institute of Employment and Vocational Training (IEFP), 20.500 unemployed people from construction were registered in the employment centers, representing 6.5% of the total number of unemployed registered (316.000). Compared to the same month of the previous year, this total number results from a decrease of 52.400 unemployed, while, as far as Construction is concerned, less 3.700 unemployed were registered.

The total employment in the economy is expected to grow 1.6% in 2022 and 0.5% in 2023 while the unemployment rate is expected to decline to 6.0% in 2022 and to 5.7% in 2023.

Construction sector production is expected to increase +3.3% in 2022, with the building construction segment growing by 1.6% and the civil engineering segment increasing by 5.2%.

Housebuilding

In 2021, the volume of production in the residential segment grew around 4.5%, in real terms.

As in the previous year, the residential segment maintained a high level of demand, both domestic and international, and continued to benefit from historically low interest rates. As a result, companies operating in this segment of activity presented a very favorable performance, particularly those that perform repair/maintenance work on residential buildings.

Thus, repair & maintenance works continued to take on the most dynamic role within the residential segment, increasing at a rate of 5.2% in real terms, while the production of new housing construction rose 4.5% from the previous year's level in real terms. 

This development reflects an acceleration in the pace of growth and should be the result of a resumption of several investment decisions that had been postponed in 2020 following the outbreak of the Covid-19 pandemic.

According to INE data, the number of new housing permits during the year 2021 reached 27.8 thousand, reflecting an increase of 11.1% compared to the previous year, while the new housing conclusions grew 15.4% until September 2021 (with 14.235 conclusions so far).

In line with housing conclusions evolution, housing sales data​​ reflects a sharp increase in 2021, in both number and global value of transactions, when compared to 2020. Until the end of September 2021, 153,1 thousand dwellings were transacted (+25.4% year-on-year), for a total amount of 24.9 billion euros, a value 33.3% higher to that observed in the same period of 2020, according to INE data.

The major share of transactions (85%) refers to already-used houses, with their number increasing by 27.0% compared to the same period of 2020. On the other hand, also the new houses transactions recorded a sharp increase of 17% in the number of transactions, facing the year before.

For 2022, forecasts point to a positive evolution of +3.3% in the residential construction segment production, after 2 years with a more moderate pace (+4.5% in 2020 and in 2021).

Both components of this segment are expected to experience growth in the pace of activity in 2022, with the maintenance/rehabilitation work component growing more intensively than the new construction component (+6.0% and +5.1%, respectively).