Construction sector expected to expand 5 pct this year

ISTANBUL

The Turkish construction sector may grow about 4.5 to 5 percent this year, according to the Association of Construction Material Producers (İMSAD).

The construction sector’s growth rate remained above the GDP expansion in the past four quarters, the association said in its monthly report.

“After a prolonged period of contraction, the construction industry is growing due to the base effect,” the report noted.

If the industry maintains its above-GDP growth trend, it is likely to expand around 5 percent in 2024, according to the association.

However, there are two factors that may limit the sector’s growth, it said.

“The monetary tightening, which is expected to continue until the final quarter of 2024, and higher interest rates. The other factor is the fact that the government budget aims for a very limited increase in investments except for the earthquake-hit regions.”

The number of building permits obtained in 2023 increased, it noted, adding that construction activity may accelerate in the runup to the local elections slated for March.

The growth in the construction sector quickened from 6.6 percent year-on-year in the second quarter of 2023 to 8.1 percent in the third quarter, when the Turkish economy expanded 3.9 percent and 5.9 percent, respectively.

The report also said construction materials production increased by 8.7 percent in October last year from the same month of 2022.

The existing construction activities index fell 5.4 points, while the new construction orders index was down 4.5 points in December 2023, according to the report.