The German Government exempted the construction sector from the lockdown measures imposed in March. While these exemptions helped keep construction sites open during the pandemic, the wider economic slowdown will hamper investment growth in the sector. Reflecting this, GlobalData expects construction industry output to record a contraction of 4.4% in real terms in 2020.

Moustafa Ali, Economist at GlobalData, comments: “Assuming that the outbreak of the virus is contained within the second quarter, there is the potential for a recovery in the second half of the year. However, a further downward revision to the forecast is likely in the event of a second outbreak with more severe lockdown measures being imposed.”

Construction output in Germany expanded by 4.1% quarter on quarter in the first three months of 2020, according to data released by the German stats office. Construction was the fastest growing sector in the first quarter. While the German economy has entered a recession following a 2.2% decline in GDP growth in the first quarter, the German economy has outperformed its European peers, largely due to strong growth in the construction sector.

Ali continued: “While construction sites were closed across much of Europe, the German construction sector has been one of the exceptions with works largely unaffected. The strong construction growth figures have vindicated the government’s decision to keep construction sites open during the pandemic.”