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GlobalData: Construction activity in Latin America to contract more than any other region

Published by , Deputy Editor
World Cement,

GlobalData lowered its 2020 construction output forecast for Latin America to -11.4% from -6.8% previously, mostly due to the slower-than-expected rebound in construction activity in the second half of the year as the coronavirus continues to spread across the region and construction companies are still struggling to revive their operations.

Dariana Tani, Economist at GlobalData, comments: “The revised forecast makes Latin America the world’s worst-performing region in terms of construction output and reflects the deepening economic damages of the COVID-19 pandemic and strict lockdowns imposed by authorities to limit its spread.”

Among the largest countries in the region, Peru’s construction output is expected to contract the most this year at -24%, followed by Argentina (-23.5%), Mexico (-15.2%), Colombia (-13.2%) and Chile (-8.2%). In Brazil, output is now projected to fall by 4.8% compared to the previous -6% as the continuity of nearly all building activities since the start of pandemic has helped prevent a much worse outcome in the second quarter.

Tani continues: “The progress in the reactivation of projects and start of new ones in some countries has been affected by the continued increase in the number of COVID-19 cases and the heightened uncertainty surrounding the economy. In 2021, GlobalData expects the industry to remain weak, increasing by just 0.2% before recovering to 3.1% over the remaining forecast period (2022–2024).”

Peru, Chile and Colombia are expected to be the best performers next year with output expected to rebound to 16.8%, 6.8% and 4.8%, respectively. Meanwhile, activity in Argentina, Mexico and Brazil is expected to continue to decline - albeit at much weaker rates - falling by -5.4%, -3.4% and -1.6%, respectively.

Tani adds: “While activity is expected to gradually recover in the coming months as more COVID-19-related restrictions are eased throughout the region, output levels recorded before the pandemic are not expected to be restored in the next four years – given the region’s structural weaknesses and longstanding issues that have been aggravated with the pandemic, including fiscal constraints, social tensions, rising inequality, low productivity and general discontent with democratic institutions.”

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