BIRLESIM_MUHENDISLIK 2023 ANNUAL REPORT

BİRLEŞİM MÜHENDİSLİK 2023 ANNUAL REPORT 35 The construction industry In 2023, Turkey’s construction industry entered the year still grappling with the lingering effects of a global pandemic and with the uncertainties of the Russia-Ukraine war that began the year before. The sector also faced challenges from high input costs and commodity shortages. Despite the devastating earthquake that struck at the beginning of the year, the construction sector rallied to rebuild the region, ending the year with growth that outpaced the rest of the economy. Despite this boost however, the sector’s growth performance still fell short of that of previous years. With the announcement of austerity measures in response to a weakening economy, the government’s decision to limit new public projects signals that a challenging 2024 lies ahead for the construction industry. The escalating cost of labor in particular has become increasingly difficult for the industry to bear. Even with increased labor costs, the shortage of skilled mid- level personnel has intensified, leading to significant challenges in recruiting and retaining qualified foremen and workers across every aspect of construction. To prevent the shortage of skilled labor and aging workforce issues currently plaguing developed European countries from spreading to our country, we must immediately abandon education policies that direct all young people towards university education. Instead, we should emphasize vocational and trade schools to provide the sector with the qualified and sufficient personnel it needs. The beneficial impact of such a policy shift on unemployment should also be obvious. There has yet to be any significant uptick in the demand for cross-border contracting services. The potential impact which emerging Israel-Palestine-Iran issues at a time when the Russia-Ukraine war is still unresolved may have on regional growth and development remains uncertain at best. Though confronted by many adversities, Turkey’s cross-border contractors also enjoy a number of advantages that enabled them to increase their combined business volume to USD 28 billion as of end-2023. In conclusion, the construction sector, which is a major driver of economic activity in countries around the world, has been facing significant challenges in our country. It is unlikely that construction activities, which have experienced a prolonged decline, will witness sustained growth in the near future. In the past, Turkish building contractors could often ride out contractions in their home market by seeking out and undertaking projects in neighboring countries. However this is now largely impossible due to the region’s current state of war, economic crisis, and security risks. Despite the current challenges, the Turkish construction industry is more than likely to play a significant role in the reconstruction of Ukraine and other countries in the region given its geographical location and proven track record With the Russia-Ukraine war’s aftermath expected to create a surge in reconstruction projects, Turkish contracting firms are well-positioned to capitalize on them while also astutely seeking out new business opportunities in other markets such as Uzbekistan, Kazakhstan, Libya, and elsewhere. SECTORAL REVIEW