Covid-19 Executive Briefing

Understanding the economic impact of the Covid-19 pandemic and the implications for the construction sector

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- ECONOMIC IMPACT -

Latest update: 6 April 2020

Many economists have cut their GDP forecasts. The 2020 consensus forecast for GDP growth is currently negative and many predict a recession.

Unemployment rates are expected to rise in all major economies. The International Labour Organization estimates 25 million job losses worldwide.

2.4% - 1.5%

The OECD's forecast for global growth in 2020, with some consensus estimates being far lower.

$2-3tn

Expected reduction in investments in the commodity-rich exporting nations, according to UNCTAD.

Impact of Covid-19 on asset prices

- SECTOR IMPACT: CONSTRUCTION -

Latest update: 6 April 

3.1%   ->   0.5%

Q4 2019 forecast

current forecast

Forecast revision for 2020 global construction output growth

GlobalData predicts that global construction output growth in 2020 will be just 0.5%, a sharp downward revision compared to the Q4 2019 forecast of 3.1%.

Across Western Europe, GlobalData now predicts that construction output will decrease by 1.9% while in North America output is expected to drop by 1.0%. Further downward revisions to these forecasts are likely in the event of prolonged lockdowns or stricter enforcement.

Impact on projects and businesses

Governments across major markets in Europe are still permitting construction sites to remain open. However, given reports of staff being laid off, it is clear that major contractors are struggling to

maintain operations at a normal level.


In the short term, there is a high risk of projects in execution being halted because of lockdowns, a lack of materials and other supply chain disruption. Projects at pre-construction stages will be severely delayed, given likely disruption to the processing of building permits, tendering and awarding contracts.


Despite huge stimulus packages, sharp cuts in interest rates and other unprecedented policy measures across all major markets, the construction industry is likely to be subdued beyond the immediate period of lockdowns and other containment measures.


GlobalData foresees particular struggles in the commercial and industrial sectors, as businesses in these sectors are most at risk from the severe drop in economic activity, domestically and globally, and their immediate priorities will be on staying afloat and rebuilding their core operations, rather than expanding and investing in new premises or capacity.

Briefing

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