South Africa’s construction sector suffers worst quarterly slide

Following the release of construction output data for South Africa by Statistics South Africa, which revealed a sharp decline in output;

Yasmine Ghozzi, Economist at GlobalData, a leading data and analytics company, offers her view on the outlook for South Africa’s construction sector:

“In line with GlobalData’s expectations of a sharp decline in construction output in South Africa in Q2 2020 amid the COVID-19 pandemic, South Africa’s construction industry is forecast to contract by 14.3% in 2020. Although there will be an improvement in the second half of the year, as restrictions on activity are eased and construction sites and mines resume operations, the industry’s outlook remains bleak and is expected to continue to be hit hard by the impact of high national debt, labor shortages and low infrastructure spending amid a depressed economy.

“South Africa’s construction sector collapsed by 33.4% in Q2 2020 – an outcome that was is in line with GlobalData’s forecast of 33.1%. South Africa’s recession has worsened as its GDP plunged by an annualized 51% in Q2 2020, which is worse than the central bank’s 40.1% estimate. The contraction was broad based, hitting most sectors of the economy, with the construction sector the biggest loser, exacerbated by a very strict lockdown in April, followed by a gradual ease in May and June.”

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