By Lorraine Turner

LONDON (Reuters) - Global Constuction output will recover to grow 70 percent by 2020, powered by emerging nations such as China and India, according to a new report published on Thursday.

China is set to overtake the United States as the largest construction market by 2018, in spite of the U.S. economy showing its first signs of growth in more than a year, and North America set to be the highest-growth region in construction amongst developed countries.

The global construction market is estimated to be worth $12.7 trillion (7.7 trillion pounds) by 2020, with emerging countries, particularly in Asia, dominating output and more than doubling their share of the market to $7 trillion, said the report.

This comes after one of the sharpest downturns in the sector in the wake of the global recession. Output has plummetted $650 billion per year since 2007 in developed countries.

"The recent slump in the global economy has been exceptionally severe and construction has been hit more severely than most industries," said the report, entitled Global Construction 2020 by Global Construction Perspectives and Oxford Economics.

However, the dark clouds are starting to lift as a global economic recovery could emerge as early as this year, the head of the International Monetary Fund, Dominique Strauss-Kahn, said last month.

This optimism is echoed by recent company updates. Holcim (HOLN.VX: Quote, Profile, Research), the world's second largest cement maker, reported forecast-beating quarterly profits on Wednesday, and highlighted strong demand in Asia Pacific as well as growth in North America, offsetting a gloomier picture for Europe.

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