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.”
