18 May 2020
Posted in Construction
Peru’s construction industry set to contract by 4% in 2020 amid measures to contain COVID-19
Peru’s construction industry is expected to contract by 4% in 2020, compared to a previous year-on-year growth forecast of 5.5%, and down from 1.5% in 2019 as a result of the stringent measures taken by the Government of Peru to contain the spread of COVID-19, according to GlobalData, a leading data and analytics company.
The measures taken, including ordering most construction activities to shutdown, have led many large-scale projects, particularly in the residential, industrial and infrastructure sectors to come to a standstill.
Dariana Tani, Economist at GlobalData, comments: “Further downward revisions are likely as the number of confirmed coronavirus cases continue to accelerate across the country and government restrictions to slow the spread of the disease are further extended. GlobalData’s current output projections assume that most projects will be reactivated by June and that the outbreak will mostly be contained by then.”
While the government’s recent announcement to gradually ease restrictions in key construction projects in May should give a boost to the sector, the extension of the lockdown restrictions nationwide will continue to have a negative impact on the industry. According to the Lima Chamber of Commerce, around 85,000 construction companies and more than one million of workers have been affected by the lockdown restrictions adopted by the Peruvian Government.
The residential market is expected to decline sharply this year due to a significant drop in housing demand, given the increase in unemployment levels and weaker economic activity. Recent data from the Ministry of Housing and Urban Development indicated that home sales are expected to fall by 25% in 2020.