LONDON, UNITED KINGDOM -- Following a difficult start to the year for Western Europe’s construction industry, which contracted by 6.4% in 2020, economic activity has picked up significantly since the spring and is forecasted to rise sharply and grow by 5.7% in 2021, according to GlobalData. The leading data and analytics company notes that, with the region gradually emerging from its winter lockdown following a steady fall in infection rates and rising vaccinations, the outlook for the regional economy and industry is strong.

According to GlobalData’s report, “Global Construction Outlook to 2025, Q2 Update,” the countries that suffered the steepest contractions in 2020 such as France, Spain, Italy and the UK, will be amongst the fastest growing in 2021.

“Following the gradual reopening across Europe in response to falling COVID-19 infection rates and successful vaccine rollouts, economic activity has picked up again in recent months with sectors such as manufacturing and construction picking up significantly,” said Moustafa Ali, economist at GlobalData. “Regional governments have also put in place significant monetary and fiscal stimulus measures to support the economy, and this will drive the recovery in the near term, particularly for subsectors such as residential and infrastructure, which will be boosted by significant government spending pledges and the low interest rate environment across the region.”

Despite the ongoing recovery, significant downside risks have emerged in recent weeks, including the supply chain difficulties and the rise of the highly infectious Delta variant, which could delay the gradual reopening and may lead to the re-imposition of stricter lockdown measures.

“The sharp rise in activity across all sectors of the economy due to pent up demand has led to supply side issues arising, with materials such as plastics, cement, timber and lumber all in shortage due to excess demand and supply chain difficulties,” Ali added. “The upsurge in the price of raw materials and other commodities are a major downside risk for the continued recovery in the construction industry.”