Real Estate and Construction Sector Dynamics Over the Business Cycle

Unveiling Economic Synchrony: Analyzing Lag Dynamics between GDP Growth and Construction Activity in Poland and Other EU Countries

“…The evolution of construction activity over the period 2000-2023 in Poland confirms the sensitivity of the construction sector to economic fluctuations. This is in line with general economic theory, which suggests that construction markets are pro-cyclical [3]. The data presented support the notion that during periods of economic prosperity, the construction sector (and especially residential construction) experiences increased demand and price growth.…”

“…The construction industry's sensitivity to economic fluctuations is well documented, and Poland's case aligns with global trends [1,3,4,41,42]. The lag dynamics observed are also influenced by factors such as funding availability, regulatory processes, and the intricate interplay between private and public construction projects [7,41].…”

“…The alternating phases of the business cycle are expansions and contractions (also known as recessions) [70]. The construction sector tends to lag behind the general business cycle at both the trough and the peak [2,3,42]. There is some scientific evidence that shows the importance of incorporating business cycle forecasting into the management of construction projects: (1) Surviving business cycles.…”

“…The intricate dynamics between the construction sector and the broader economy have long been a subject of interest, motivated by the cyclical nature of the construction industry and its sensitivity to economic fluctuations [1][2][3][4][5]. The cyclicality of real estate markets [6], investment decisions [7], and the temporal dynamics [1] of construction activity make it imperative to comprehend the nuanced relationship with broader economic conditions.…”