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GlobalData forecasts disruption for construction industry in Eastern and Western Europe

Published by , Deputy Editor
World Cement,

Construction activity across Eastern Europe slowed markedly in 2019 and in 2020 output will be severely impacted by COVID-19 containment measures. Leading data and analytics company GlobalData now expects growth in the region to drop to -1.4% in 2020.

Moustafa Ali, Economist at GlobalData, comments: “The outlook for the Eastern European construction industry is less severe than in Western Europe, as the region has not suffered to the same extent as major markets such as Italy, France and Spain. While the impact of the virus has so far been limited, the health situation is expected to deteriorate in the coming months. The major Eastern European construction markets are set for severe disruption in the first half of 2020.”

The Polish construction sector is expected to suffer disruption as several contractors operating in the country have announced site closures in response to the outbreak. Russian construction output is expected to contract as the virus outbreak coupled with low oil prices will lead to project delays and cancellations in the coming months. Turkey’s construction sector is set to face disruption in the first half of 2020.

Ali notes: “Industrial construction has so far been the most impacted sector with several manufacturers including Ford and Honda announcing site closures.”

The company also forecasts that the Western European construction industry will contract by 5.1% in 2020, a sharp downward revision from the 0.7% expansion forecasted in the Q4 2019 update. A further downward revision of the forecast is likely if containment measures are extended in the coming weeks.

Moustafa Ali, Economist at GlobalData, comments: “Governments across the region have responded to the virus outbreak by imposing strict lockdown measures, including the closure of construction sites in ‘non-essential’ sectors. Several major contractors have issued profit warnings, suspended dividend payments to shareholders and cut staff salaries amid the project delays and site closures.”

“The measures imposed have led to severe disruption in key markets. In the UK, it is estimated that one in five construction sites have been closed since mid-March. In France, although the construction industry has been exempt from the nationwide lockdown that has been in place since mid-March, projects appear to have been severely disrupted.”

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European cement news