Spain construction output picks up in Q3 but is still weak, says GlobalData

Following the release of data from the Spanish National Statistics Institute (INE) showing a strong quarter-on-quarter rebound in construction output in Q3 2020.

Moustafa Ali, Economist at GlobalData, a leading data and analytics company, offers his view:

GlobalData expects to downgrade its construction output growth forecast for Spain in 2020, from its current -10.4% projection. Following a 21.9% contraction in Q2, the Spanish construction sector rebounded on a quarterly basis in Q3 with an expansion of 22.5%. However, it was still down sharply on a year-on-year basis – plummeting by 8.9%.

“The quarterly improvement reflects the reopening of construction sites and the lifting of lockdown measures across the country, however, the number of new COVID-19 cases have spiked in Spain in the last month, and, although the government has thus far opted for localized lockdown measures, the prospect of a stricter lockdown is a major downside risk for the construction sector.

“The Spanish economy has been deeply scarred by the virus outbreak, with its large tourism sector bearing the brunt of the economic damage. Although the economy rebounded strongly in Q3, the lockdown measures coupled with weakening economic conditions are likely to lead to a difficult Q4 for the construction sector. On a positive note, the government’s stimulus measures and its willingness to keep construction sites open will mean the sector will avoid the deep contraction seen in Q2.”

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