Future macroeconomic development

The IMF forecasts global economic growth of 3.3% for 2025 (as at January 2025). This expectation is below the historical average of 3.7% for the years 2000 to 2019. Compared to the World Economic Outlook (WEO) from October 2024, the current forecast remains largely unchanged with an increase of just 0.1 percentage points, which is primarily due to the 0.5 percentage point increase in real gross domestic product in the United States and offsets the downward revisions in other leading European economies such as Germany (-0.5 percentage points) and France (-0.3 percentage points). In addition, the IMF expects global headline inflation to fall to 4.2% in 2025, with convergence to the target occurring earlier in advanced economies than in emerging and developing economies. In countries where inflation is proving more stubborn, central banks are taking a more cautious approach to monetary easing, keeping a close eye on economic and labor market indicators as well as exchange rate developments. While the US Federal Reserve is likely to slow the pace of monetary easing in 2025, further interest rate cuts by the European Central Bank and the Bank of England are considered likely. The Bank of Japan could raise interest rates and thus pursue a divergent monetary policy.

The European Commission expects economic activity in the European Union (EU) to accelerate to 1.5% in 2025 and to 1.3% in the euro area. Inflation in the EU is likely to fall from 2.6% last year to 2.4% in 2025 and slow from 2.4% in 2024 to 2.1% this year in the eurozone. According to Central Bank President Christine Lagarde, the European Central Bank is therefore close to achieving its target of 2.0% inflation for the eurozone.

Market	Economic growth in 2025	Key factors
Core markets
Germany	+0,3%	The main driver of economic growth in 2025 will be increased domestic demand due to the decline in inflation from 2.4% to 2.1% and rising real wages (European Commission). Net wages are likely to rise by 0.4% in real terms in 2025. Against this backdrop, the German Council of Economic Experts expects price-adjusted growth of 0.5% for private consumption. Falling financing costs due to the easing of monetary policy should encourage investment. Low capacity utilization in the manufacturing sector will dampen corporate investments, which will only grow slightly in 2025. Energy costs will remain significantly higher than pre-pandemic levels and will weigh on the international competitiveness of energy-intensive industries. Despite improved demand, foreign trade will make a slightly negative contribution to economic growth in 2025. The manufacturing industry will lose competitiveness due to price increases as a result of the sharp rise in production costs relative to other countries coupled with weak productivity growth. According to the European Commission, unemployment will stagnate at 3.3%.
Netherlands	+1,6%	The Dutch economy is expected to grow steadily in 2025. Inflation will continue to fall and is expected to drop to 2.4% in 2025 (European Commission). Solid wage growth (4.7% according to the European Commission) and tax cuts will additionally support real income and should boost private consumption. The prospects for corporate investment and trade are improving due to the easing of financing conditions. Economic activity will also be boosted by additional government investment in areas such as defense. RaboResearch expects government investment to grow by 5.3% in 2025. According to the OECD, unemployment will rise slightly to 3.8%. The labor market remains tense for companies. The ongoing tensions in global trade, such as the threat of trade tariffs between the EU and the US, are a burden for the Dutch export sector. This is likely to have a negative impact on export growth. In addition, geopolitical uncertainties and potential economic slumps in key markets, such as the neighbouring country and, in the past, most important trading partner Germany, could destabilize international business.
Switzerland	+1,5%	Weaker growth compared to the historical average (1.8% according to the SECO State Secretariat for Economic Affairs) is expected for 2025. There is great uncertainty regarding future international economic and trade policy as well as the economic development of key export partners. The economic outlook for the USA has improved further, while the German and European economies are developing more weakly than previously expected. Inflation is expected to fall more sharply than previously forecast (0.3% in 2025 according to the SECO State Secretariat for Economic Affairs). According to the OECD, consumer price inflation is likely to reach the middle of the central bank's target range of 1.0% in the first quarter of 2025 and remain at this level in 2025 and 2026. The exchange rate continues to weigh on the economy. Further increases in employment are expected in 2025. Domestic demand is supporting growth through rising consumer spending by private households (+1.5% in 2025 according to the OECD). Lower mortgage interest rates should stimulate construction activity. The unemployment rate will rise to 2.7% (SECO State Secretariat for Economic Affairs).
Growth markets
Great Britain	+1,6%	According to the OECD, the harmonized index of consumer prices (HICP) is expected to rise by 2.7% compared to the previous year. Further interest rate cuts by the Bank of England are expected. In view of the high inflation and increasing uncertainty, the BoE is likely to maintain a cautious pace of interest rate cuts and gradually reduce the prime rate to 4.0% by the end of 2025 (KPMG). Current government spending and public investment will rise, with half of the increase being financed by higher taxes, pushing tax revenues towards a historic high. Government consumption and investment are expected to boost growth in 2025, while tax increases are more likely to have a negative impact on private consumption. Foreign trade is also likely to have a negative impact on growth in 2025. The outlook for the UK's largest trading partner, the EU, is subdued. li>The unemployment rate is falling (OECD: 4.0% in 2025), as public spending is supporting demand for labor and companies are holding on to their employees in view of the shortage of skilled workers.
USA	+2,7%	Real GDP growth is likely to decline slightly. The reasons for this are the normalization of immigration, cooling demand for labour and declining private consumption due to depleted savings accumulated during the pandemic. Tax cuts and the deregulation of key economic sectors are likely to boost the US economy. Private investment and corporate investment are expected to increase moderately. Among the risks affecting the growth forecast is the expected increase in trade conflicts. Productivity is growing strongly and is being driven by advances in artificial intelligence. Bottlenecks in highly skilled labor are expected to be addressed by reforms to the visa system for skilled workers and increase the relatively low level of employment-based immigration. The unemployment rate remains at a low level, rising slightly from 4.0% in 2024 to 4.1% (OECD). The budget deficit will remain very high at over 7.5% of GDP according to the OECD. This is due to the structural imbalance between higher expenditure, including for mandatory social programs due to the ageing population, and a tax base that has narrowed over the last decade.
France	+0,8%	According to the OECD, the announced government budget consolidation measures (including tax increases) will "cost" 1.0% of GDP and therefore slow economic growth. According to OECD and Banque de France projections, overall inflation is expected to fall to 1.6%. Almost 0.3 percentage points can be attributed to the government's reduction in electricity prices (OECD). Rising real wages due to moderate inflation could lead to a recovery in private consumption and thus contribute to growth. However, the contribution to growth from private investment is likely to remain negative, albeit to a much lesser extent than in 2024. Foreign trade should still make a positive contribution to growth, albeit to a lesser extent than in 2024, as imports are normalizing after a phase of significant decline. The labor force participation of low-skilled and older workers is expected to rise due to the reform of social welfare and the increase in the retirement age. The unemployment rate is expected to rise from 7.4% in 2024 to 7.7% (OECD) due to slower production growth.
* Economic growth according to IMF, World Economic Outlook Update, January 2025 and State Secretariat for Economic Affairs SECO, Economic forecasts, 17.12.2024

Forecasts point to a positive development in construction activity in the 19 EUROCONSTRUCT countries from 2025. According to the results of the 98th EUROCONSTRUCT conference, a slight recovery with growth of 0.6% is expected, which should gain momentum in the following two years (forecast for construction output in 2026: 1.8%, 2027: 1.7%). Compared to the estimates in the 97th EUROCONSTRUCT report, however, growth in 2025 will be weaker than predicted at the summer conference in June 2024 and has been revised downwards by 0.7 percentage points. The new residential construction sector is expected to stagnate in 2025 with growth of 0.2%, but will gain momentum in the following years and increase by 3.5% and 3.3% respectively in the period 2026-2027. The market for home renovation will decline by 1.3% next year. A recovery is forecast from 2026 onwards, due to demographic factors, economic conditions, an improved financial situation of households and more favorable subsidy systems for home renovations. The non-residential construction sector will grow at an average annual rate of 1.6% between 2025 and 2027, mainly due to various subsidies, tax credits and incentives.

Market	Development of the construction industry in 2025	Key factors
Core markets
Germany	-1,0%	According to EUROCONSTRUCT, the construction volume will shrink by a further 4.0% in the period from 2024 to 2026 (cf. 2021-23:-5.4%) and will only stabilize again from 2027. Demand for construction services in the building construction sectors will lag behind investment requirements. Almost three years after the energy price shocks, high construction and financing costs are still hampering new residential construction. Construction investment in residential construction is expected to fall by 4.0% in 2025 (German Economic Institute). In non-residential construction, the German Economic Institute expects construction investment to increase slightly by 0.5% in 2025. This would be the first year of positive growth since 2020. The outlook for civil engineering is better than for building construction, driven by major projects in the areas of rail infrastructure, power lines and renewable energies. Commercial construction is expected to grow by 0.5% in 2025 (German Economic Institute). Average increase in construction prices of 1.9% according to the Federation of the German Construction Industry for total construction investments.
Netherlands	+1,6%	An upturn in the construction industry is forecast, mainly due to the increase in residential construction activity. Sales of new builds are rising due to higher wages and lower interest rates. Better-filled order books for housebuilders, which have risen to record levels, and a sharp increase in sales for project developers are expected. At the same time, however, the industry's moderate growth is being hampered by structural bottlenecks such as a lack of building land, complex and lengthy project developments, legal delays and grid bottlenecks that prevent new residential areas from being connected to the electricity grid. By 2030, the Dutch government has committed to building 110,000 new homes per year in order to reduce the housing shortage to a level of 2.0% of the total housing stock (EUROCONSTRUCT). While the market for new non-residential buildings remains a challenge, the renovation of non-residential buildings is expected to grow steadily from 2025, particularly in light of the EU sustainability directives and due to an outdated stock of public buildings in the healthcare and education sectors. Investments in commercial construction will only increase slightly in 2025 due to the uncertain economic situation.
Switzerland	+2,6%	Construction prices appear to be stabilizing at a high level. Although wage pressure in the construction industry will remain, it is likely to be less pronounced than in previous years. The lower financing costs resulting from the SNB's interest rate cuts in 2024 should have a positive impact on the development of construction investment in building construction. Wüest Partner expects a significant upturn and growth of 4.6% in 2025 (new construction: +4.0%; renovation: +5.7%). The reason for the very optimistic construction forecasts is the increase in building permits (new construction investments in the residential sector: +19.0%; conversion sector: +24.0% according to Wüest Partner) The favorable development of the Swiss labor market in the coming years will support the growing demand on the housing market. EUROCONSTRUCT forecasts an increase in real non-residential investment of 2.9% in 2025. The level of real investment to be achieved up to and including 2027 (2026: 1.3%, 2027: 1.1%) is significantly below the level of investment in 2021. In their expectations for 2025, companies are focusing their investments mainly on equipment and R&D and, to a lesser extent, on the construction sector.
Growth markets
Great Britain	+2,9%	Continued optimism regarding growth within the UK construction industry and expected increase in workload. Both private residential construction and private non-residential construction are expected to grow in 2025. EUROCONSTRUCT expects an increase of 6.0% for new residential construction. Total output in non-residential construction is expected to increase by an average of 3.0% per year over the forecast period 2025-27 (EUROCONSTRUCT). Growth is forecast for both new buildings and renovations in the non-residential buildings sector. Renovation output for non-residential buildings is expected to grow by an average of 2.4% in the period 2025-27 according to EUROCONSTRUCT, with both the public and private sectors contributing to a new high. Improved credit conditions due to the expected key interest rate cuts in 2025 should give the construction industry a boost. Challenges such as tight profit margins across the industry and the ongoing skills shortage remain.
USA	+2,0%	FMI Corp expects growth of 2.0% for residential buildings. While single-family homes (+4.0%) and maintenance and modernization (+5.0%) will develop positively, a decline of 13.0% is expected for multi-family homes. Single-family house construction, the largest sector segment, is expected to benefit from the recent interest rate cut and political support for financing. There are considerable growth prospects for the market for rented single-family homes. Investments in the renovation sector will increase due to lower borrowing costs, which will improve homeowners' refinancing options. Multi-family construction is expected to shrink over the next few years due to the completion of a large and rapid construction cycle. The other construction sectors are expected to perform well in 2025 as they are supported by permanent legislation such as the Infrastructure Investment and Jobs Act (IIJA), the Inflation Reduction Act (IRA) and the CHIPS and Science Act (2.0% growth in non-residential construction according to FMI Corp). Growth of 5.0% is expected in the civil engineering sector (FMI Corp). According to RICS, companies in the construction sector plan to increase the number of employees in 2025.
France	-0,7%	The decline in the construction industry is continuing. Lending rates are expected to remain at a high level of around 3.0% for the period 2025-27 (EUROCONSTRUCT). This is likely to have a negative impact on access to credit, particularly for low-income households and first-time buyers. Real estate prices are rising steadily and the quality of supply does not meet demand, which poses an additional threat to households' purchasing power. Despite a more favorable macro-financial environment, new residential construction activity is expected to fall by 14.2% according to the Fédération Française du Bâtiment, after the number of housing starts reached a new low. New construction of non-residential buildings is expected to fall by 15.0% (Fédération Française du Bâtiment), as the general uncertainty and current credit conditions are not providing sufficient incentives for investment. Due to a general wait-and-see attitude, growth in maintenance and modernization is expected to slow to 0.9% compared to 2024 according to the Fédération Française du Bâtiment. A massive decline in employment of almost 7.5% is forecast. By 2025, around 100,000 fulltime jobs in the construction industry would be under threat (Fédération Française du Bâtiment).
* Development of the construction industry according to 98th EUROCONSTRUCT Summary Report, Winter 2024, p. 42 und 2025 North American Engineering and Construction Industry Overview, First Quarter Edition, p. 38