The outbreak of the COVID-19 pandemic has affected the global economic outlook, but the construction industry has remained largely immune to its consequences, as it is one of the few that can operate under the conditions it has constrained. The construction industry in Poland was one of the few sectors that showed a relatively high degree of resilience to the impediments to the economy caused by the COVID-19 outbreak, due, among other things, to the avoidance of a top-down decision that would have forced companies to halt construction work, as happened for example in Spain, Austria and Belgium.
Construction companies in Poland continued to work under the tightened sanitation regime with an efficiency about 5% to 20% lower than compared to the pre-pandemic situation. The factors contributing to the decline in their efficiency included staff problems (due to the exodus of workers from Ukraine and Belarus), moderate problems with the supply of imported materials and products (mainly in the cubature construction segment), and prolonged administrative procedures as a result of the slowdown in the work of authorities, as well as a significant increase in the prices of some materials and products for construction.
It was certainly very important that the lockdown did not extend to the construction industry in Poland. However, the economic crisis caused by the COVID-19 pandemic had a moderately negative impact on the Polish construction industry. As a result, in 2020, against the backdrop of the EUROCONSTRUCT 19 countries, which recorded a decrease in annual total construction output of 4.6%, in Poland the decrease was only 0.6%.
In 2021, after the covid shock experienced by the global and European economies, construction in Europe revived and there was an increase in production in the 19 EUROCONSTRUCT countries by 5.3%, in Poland the increase was 4.7%.
Thanks to the Anti-Crisis Shield implemented by the Government, which allowed public investment (mainly in the road, railroad, energy and hydraulic engineering segments) to be maintained and increased in order to fill the gap after the decline in investment in the local government and private segments (mainly in non-residential, office, hotel and retail space).
The effects of the downturn were not spread evenly across the construction market, and the financial performance of construction companies depended on their size, type of business and the structure of their order booḱ.
In 2021, there was a record double-digit increase in output in new residential construction, up 19.6%, and a much lower 3.1% in engineering construction, with a 1.2% drop in output in non-residential construction.
The impact of the war in Ukraine, which broke out in February 2022, was deeper than that caused by the pandemic, but did not stop the sustained annual growth halted only in 2020.
Although, as at the beginning of the pandemic, supply chains were again disrupted, especially from eastern directions, causing a drastic increase in the price of some construction products.
The increase in these prices and inflation worsened the profitability of construction production, mainly contracts that were carried out under the long-term formula (design and build), especially those in the first phase of construction in 2022.
Despite these negative phenomena – by the end of 2022 there was a significant increase in economic and construction production realized in the country after the negative effects of the COVID-19 pandemic were overcome in 2021. The increase in construction production sales in 2022 was accompanied by an increase in sales of the construction materials and products industry and the number of employees in construction companies with more than 9 employees. Sales of output of the construction materials and products industry in 2022 increased by 5.9% over the year, (up 14.1% a year ago), and the number of employees in the business sector increased by 2.2% (down 0.4% a year ago).
In 2022, mainly as a result of double-digit inflation growth, there was a strong increase in construction company wage growth to 12.2% year-over-year, following a 7.8% increase in the previous year. The CSO estimates that in 2022, construction output prices were higher than in the previous year by as much as 12.7% (after rising by 4.2% in 2021).
The drastic deterioration of financing conditions for the construction of new housing in Poland in 2022 (double-digit increases in mortgage interest rates) did not stop the high activity of this type of construction, as despite the decline in the number of housing starts, more housing was put into operation thanks to the completion of the record number of housing starts in previous years.
In 2023, following some slowdown in economic growth in Poland, construction output nearly stagnated after very strong increases in the previous year. This was mainly due to a 3.1% fall in residential construction output (15.2% growth the previous year). However, the slight increase in construction output in Poland in 2023 was accompanied by a decline in sales in the construction materials and products industry and in the number of persons employed in construction enterprises with more than 9 employees.The output of the building materials and products industry also fell by 10.9 % over the year (a year earlier it had risen by 5.9 %), and the number of persons employed in the corporate sector fell by 2.2 % (a year earlier it had risen by 2.2 %).
With inflation falling sharply, year-on-year wage growth for construction companies will also fall from 12.2 per cent in 2022 to 7.5 per cent in 2023. Consequently, against the background of the 19 EUROCONSTRUCT countries, which recorded a 1.5% increase in total construction output between 2020 and 2023, Poland’s construction industry recorded a tenfold increase, reaching 15.4% in 2023.
