COVID-19 economic shock will cause global construction output to shrink by 1.4% in 2020
As a result of the severe economic shock caused by the lockdown measures imposed by governments around the world to contain the spread of COVID-19, global construction output is expected to contract by 1.4 per cent in 2020, according to GlobalData, a data and analytics company.
“Although the construction industry has in some cases been exempt from restrictions on business activity, few major markets will manage to record an increase in construction output in 2020,” says Danny Richards, Lead Economist at GlobalData.
Before the COVID-19 outbreak, the global construction industry had been expected to grow by 3.1 per cent. This was initially revised down to just 0.5 per cent in late March based on a review of the impact of COVID-19 at that point in time. However, in view of the rapidly evolving nature of the pandemic and the more drastic measures being taken to contain the spread, GlobalData has further adjusted the outlook for the 91 countries covered.
Richards continues: “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 in processing building permits, tendering, and awarding contracts.”
Based on the latest updates of mega projects being tracked by GlobalData, global construction momentum has slowed considerably – GlobalData’s Global Construction Projects Momentum Index (CPMI) score (adjusted) dropped to 0.39, from 0.46 in Q4 2019. The unadjusted score plummeted to a low of 0.22, reflecting the severity of the impact of the COVID-19 outbreak on construction projects.
Richards adds: “Given the extent to which the crisis intensified across the world in March, with many major markets in effect shutting down, the Global CPMI score dropped into negative territory, falling to -0.05.”