Economic downturn takes toll on construction

Building contractors in Greece have been shutting down at a fast pace so far this year as the recession bites hard into one of the economy’s largest sectors. Data from the Federation of Building Developers, which has some 15,000 members, show that five building companies have been closing down daily this year, according to business website In the first five months of 2010, some 734 building contractors were deleted from the federation’s membership list, which is equivalent to roughly 5 percent of total members. The downturn in the construction sector is attributed to a significant decline in consumer demand and tighter lending policies adopted by banks, which fear that customers might struggle to repay loans due to the deepening recession. Industry sources said that they don’t expect any sign of a turnaround in the sector anytime soon. «At this moment, the construction sector is essentially dead,» one building industry source said. Construction accounts for about 7 percent of Greece’s annual economic output, which is expected to contract by 4 percent this year. The slowdown in building activity is weighing heavily on the job market as the construction sector employs some 400,000 workers, according to data from the end of last year. The latest figures from the Hellenic Statistical Authority (ELSTAT) for February show that construction activity, measured by the number of new building permits issued, fell 23.1 percent year-on-year, after rising nearly 13 percent in the previous month.