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: 28 July 2020

Many economists have cut their GDP forecasts; 2020 consensus forecast for world GDP growth is -4%, with a recession expected.

Worldwide unemployment continues to rise. Unemployment rate in the Eurozone stood at 7.4% with 12.15 million unemployed in May. 

-8%

Fitch Ratings forecasts that Eurozone GDP will contract by 8% in 2020. 

2024

EY predicts the UK economy will take until 2024 to fully recover from the economic impact.

Impact of Covid-19 on hiring

- SECTOR IMPACT: CONSTRUCTION -

Latest update: 29 July 2020

3.1%   ->   -3.2%

Q4 2019 forecast

current forecast

Forecast revision for 2020 global construction output growth

GlobalData predicts that global construction output will contract by 3.2% in 2020, a sharp downward revision compared to the forecast increase of 3.1% pre-Covid-19.

Across Western Europe, GlobalData now predicts that construction output will decrease by 8.1% while in North America output is expected to drop by 6.6%.. In the event that lockdown measures are maintained or re-imposed, further downward revisions to the growth outlook are likely.

Supply chain and demand disruption

The construction industry will be heavily affected by the economic downturn. Planned projects are at a high risk of being delayed or cancelled.


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 disruption processing building permits, tendering and awarding contracts.


This has had a sever impact on unemployment. In Q2 2020, contractors have laid off workers and used government support programmes.


However, governments and public authorities will advance spending on infrastructure projects as soon as normality returns to reinvigorate the industry.


This will be spread across all areas of transport infrastructure and energy and utilities.

Briefing

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