Geopolitical Shocks Rattle Germany's Construction Sector

Germany's construction industry struggles amid a downturn, exacerbated by geopolitical tensions and rising energy prices. Marcus Nachbauer warns of increased costs for key materials due to Middle East conflicts. Despite a nominal revenue rise in 2025, the sector faces challenges unless faster planning and infrastructure investments occur.

Germany's construction sector remains mired in a downturn as an anticipated recovery is thwarted by geopolitical tensions and a consequential spike in prices, according to the head of the leading industry association.

Marcus Nachbauer, chair of the Bundesvereinigung Bauwirtschaft, highlighted that the recent conflict in the Middle East and the temporary closure of the Strait of Hormuz have led to increased energy and raw material costs, adding further pressure on firms already grappling with low demand.

Notably, prices for essential resources such as bitumen and plastics have surged, affecting around 80% of surveyed companies. While the sector reported a nominal revenue increase to €432 billion in 2025 due to price effects, construction volumes weakened. The outlook for 2026 remains bleak unless there are improvements in planning, subsidies, and infrastructure investment.