Surge of COVID-19 infections threaten India’s promising 2021 recovery, says GlobalData

Following a collapse in construction activity in 2020 amid the COVID-19 pandemic, the Indian construction industry was forecast to recover in 2021. However, a recent surge in coronavirus infections may jeopardise a ‘return to normal’ for construction activity, thus dampening the outlook of the industry this year, says GlobalData, a leading data and analytics company.

According to GlobalData’s ‘Construction in India – Key Trends and Opportunities to 2025, Q1 2021 Update’ report, growth was set to return at a real rate of 13%.

India’s vaccination program began on 16 January 2021 and the plateauing of daily case numbers in early March led some to hope the worst of the pandemic was over in India. However, the daily confirmed cases rose to 184,372 on 13 April, far exceeding the peak recorded in the first wave. At the center of the epidemic is Maharashtra, accounting for 60,212 new cases, which is closing non-essential services and restricting non-emergency travel until 1 May.

Willis Rooney, Economist at GlobalData, comments: “Containing the spread of the epidemic and preventing a return of the restrictions and uncertainty seen in 2020 are vital to ensuring the recovery of both the construction industry and the wider economy.

“GlobalData estimates the Indian construction industry to contract by 12.4% in 2020, the largest fall in output in South Asia. The performance of the industry was severely hampered by the 68-day national lockdown in March, deteriorating business and investor confidence and financial constraints arising over the course of the pandemic.”

The residential construction sector was particularly impacted, contracting by 15.2%, with falling confidence and worsening household incomes compounding an existing shortage of liquidity in the sector.

Mr Rooney concludes: “Growth in the construction industry in 2021 is forecast to be strong, with output values across much of the industry expected to recover to their pre-pandemic levels by 2022 at the latest. However, as previously mentioned, if the spread of the epidemic is not contained, and its effects on income, uncertainty and confidence return, the outlook for the industry would look far less promising.”

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