South African construction collapses

By Andy Brown10 September 2020

Bandeira-da-Africa-do-Sul

Data released by Statistics South Africa has shown that South Africa’s construction sector contracted by 33.4% in the second quarter of 2020 as a result of the Covid-19 pandemic.

This is a decline of 76% on an annualised (what growth would be over a full year if the quarter-on-quarter growth rate were to occur four times in succession) basis for construction. 

The South African economy as a whole saw its Gross Domestic Product (GDP) decline by an annualised 51% in the second quarter of 2020, its fourth consecutive economic decline recorded. While many sectors were badly impacted construction suffered one of the biggest losses, with the sector hit by a very strict lockdown in April which only gradually eased in May and June.

“Perhaps the second quarter of 2020 will become known as the pandemic quarter,” the national statistics service said.

Construction has now experienced its eighth consecutive quarter of economic decline and the mining sector has also been severely impacted.

“South Africa’s construction industry is forecast to contract by 14.3% in 2020,” said Yasmine Ghozzi, economist at GlobalData.

“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, labour shortages and low infrastructure spending amid a depressed economy.”

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