02 Jul 2020
Posted in Construction
Latin America construction output now expected to contract by 6.8% in 2020, says GlobalData
GlobalData has further cut its forecast for Latin America’s construction industry, with output now expected to contract by 6.8% in 2020, down from the previous forecast of -5.5% in the May 2020 update and growth of 2.3% pre-COVID-19.
Construction activity in all major markets, including Brazil, Mexico and Argentina is projected to decline sharply this year as the COVID-19 pandemic continues to spread rapidly across the region, adding pressure to public authorities to further extend their lockdown measures, including travel restrictions, social distancing guidelines and the closure of non-essential businesses and schools.
The worst performers this year are Argentina (-16%), Peru (-14%) Mexico (-8%), Brazil (-6%), Colombia (-5.5%) and Chile (-4.5%).
Dariana Tani, Economist at GlobalData, comments: “The extension of quarantine restrictions together with weakening economic activity, supply chain disruptions and rising unemployment levels will keep investments at very low levels this year.”
In 2021, GlobalData expects the industry to remain weak, declining by 1.7% before recovering to 2.4% over the remaining forecast period (2022–2024).
Other key factors impacting the industry are slower global demand, lower commodity prices, currency devaluations, a surge in capital flights and drops in tourism and remittance levels.
The International Monetary Fund now expects economic activity in Latin America to contract by 9.4% as most countries are still struggling to contain infections. This compares to a previously expected contraction of -5.2% in April’s update.