According to latest forecasts, the Finnish GDP will grow by approximately 3% both in 2021 and 2022. Recovery has been somewhat delayed and will spread out to two consecutive years. Key growth factors include good growth in both exports and consumption demand. Industrial confidence has improved substantially as the global economic outlook brightens up. The growth is driven by China and the USA, but growth in the EU will also gain strength compared to last year’s poor numbers. Impacts of the pandemic and the strong growth have also been reflected in inflation and price growth, along with difficulties in product availability. The increasing COVID-19 vaccination coverage adds to the confidence in economic growth and coronavirus-induced restrictions are currently being lifted in developed countries. New infection waves are still possible, however.

Construction was the only significant sector in Finland whose volume did not reduce in 2020, the year characterized by COVID-19. Partly due to this fact, additional growth is not expected in construction this year. Residential construction will grow this year whereas commercial construction will reduce. Next year, the volume of construction is expected to decrease by 1%.

The volume predictions made right after the COVID-19 outbreak about construction equipment rental in 2020 also indicated growth (+1% in May 2020). The actual number for 2020 is likely to end up at +4%, which is still slightly higher than forecast in November 2020 (+3%). The rental market forecast for this year stands at +1% (-3% in November). Despite the slight decrease in construction, a +2% growth is predicted for equipment rental in 2022.

Economic forecasts have been raised significantly – pre-corona level to be reached at turn of year

Getting the COVID-19 pandemic under control in developed countries has improved confidence in the future. Confidence in different sectors and Purchasing Managers’ Indexes have risen significantly around the world. However, a threat of new coronavirus waves still persists despite the improved vaccination coverage. The impacts of the virus on the global economy will continue throughout the year 2021, causing risks to the economy.

Massive reflationary measures and zero interest rates in various countries have boosted the economy and forecasts have been risen. The impact is great on the exports-focused Finnish economy. Inflation and price growth, along with weakened product availability, cast a slight shadow on the growth, however. The price growth is predicted to be short-lived, however. The comparison figures from a year ago are also low. As regards construction, investors’ interest in dwellings and properties persists. There is plenty of equity available and searching for investment targets.

Construction will grow slightly in 2021 and drop slightly in 2022

The favourable order books in construction and the persistence of consumers’ confidence in the future during the COVID-19 period kept construction in a slight growth in 2020, as projected in previous forecasts. Consumers’ buying intentions are record-high and the rise has continued early in 2021 as regards home buying, renovation and interior decoration, for example. COVID-19 has increased the willingness to invest in everything related to homes and housing.

Somewhat surprisingly, housing construction starts took a strong upward turn in autumn 2020, and the high level of starts has continued in 2021. The number of building licences for housing construction has increased and returned to the level of over 40,000 dwellings. Dwelling starts are predicted to take a downward turn in the latter part of 2021, however, and to continue the decline in 2022. The numbers will not sink as low as during the recession but rather revert to a normal, demand-based level from their previous, exceptionally high production levels. Strong investor demand is decreasing but consumers are now buying dwellings for their own use. The briskier housing construction from autumn 2020 onwards has focused on the capital region and other growth centres. The construction and sales of 1+2 family houses and attached houses have picked up significantly. Many are interested in investing in their own yards.

Construction was driven by commercial construction last year, which strongly supported equipment rental. Construction equipment are used more in commercial construction than in residential construction. The construction of public service buildings (schools, hospitals, arenas) will continue to be active. COVID-19 has caused problems for the construction of commercial premises and offices, and the number of building licences has clearly decreased. The capital area is the only region experiencing positive development. There are quite many commercial construction projects planned for launch, in addition to large industrial projects pending. The improving economic cycle is expected to give rise to new projects. Various projects are pending related to bioproducts, batteries and renewable energy power plants.

Renovation is on the rise this year and the next. Last year, the renovation sector was kept going by DIY renovation and the renovation volume of commercial space was also surprisingly good. Professional renovation will also find growth as COVID-19 restrictions are lifted, more strongly only in 2022.

Civil engineering construction grew notably in 2020 (+8%) but will decrease this year. Next year and the following years, EU stimulus money will somewhat add to the number of civil engineering projects. The number of traffic infrastructure projects in large cities is continuously high (tramlines, metro, etc.).

Construction equipment rental market will grow by 1% in 2021 – growth will pick up next year and rise to approximately 2%

The value of rental activities amounted to 890 million euros last year. The volume grew by over 4% and exceeded the 3% forecast made in November 2020. The addition was mainly due to the upswing in housing construction at the end of the year. Construction is by far the largest sector of rental equipment users, valued at nearly 600 million euros. A third of rental equipment use, 300 million euros, comes from non-construction areas, such as maintenance, installation and other work in industry, the service and events sector, public administration and consumer projects.

The field of construction equipment rental has experienced very positive developments in the COVID-19 era, thus deviating from a majority of sectors. A solid foundation is laid by the fact that construction has continued on a good level throughout the COVID-19 period. The rental market will grow by 1% in 2021. Growth will be highest in non-construction fields and in renovation. The use for new construction will decrease by 2%.

Construction equipment rental for other fields will increase from last year’s poor numbers as the economy grows, although scaffold rental, for example, still suffers from the lack of events arranged. The use of rental machinery in other fields is becoming increasingly common and it is also used for an increasing number of tasks. Machinery use during a major downtime at the Porvoo refinery will increase machine use to a significant extent. Rental for other fields will grow by +5% this year and remain unchanged next year.

Equipment rental for renovation suffered from last year’s COVID-19 situation as professional renovation in dwellings decreased. COVID-19 boosted the number of self-directed renovation projects, in turn, but related equipment rental is only minor. Professional renovation will grow this year and the growth will pick up speed next year.

In construction, weather guards are used to an increasing extent in both new construction and renovation. The rental of scaffolds and protective equipment will continue to increase more than that of other equipment types.

Last year, the sales and imports of construction machinery decreased clearly less than predicted, by approximately -5–0%. This year’s assessments predict growth. Last year’s good numbers have lowered the growth expectations to 0–5%, however.

Further information:
Markku Riihimäki

Forecon Ltd
+358 40 704 1187

Pekka Pajakkala

Senior Advisor
Forecon Ltd
+358 400 476 249

Juha Ala-Hiiro

Senior Advisor
The Association of Finnish Technical Traders
+358 40 197 3414

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