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The report produced a month ago on the "situation and forecasts in Europe for the construction sector" 


 The report produced a month ago on the "situation and forecasts in Europe for the construction sector" estimates that two-thirds of the European market aspire to recover in two years.

Spain will need more time, but we aspire to a recovery of around 2.5% by 2022, less than the expected 6% estimated for 2020.

The COVID19 pandemic has temporarily paralyzed works in more than 8 of the 19 countries in the Euroconstruct zone. All this has led to an increase in significant public spending in all countries and to having to test all economic mechanisms and resources at the national and community level, reducing the capacity of all countries to invest in public developers.

The forecast includes a production decline of -11.5% in 2020, after which the rebound will begin to be noticed in 2021 (+ 6%) and will continue in 2022 (+ 3.5%). This path is very similar to that expected for the economy as a whole, with one caveat: while GDP is expected to end in 2022 at 2019 levels, in the case of the construction sector it would still be 3% below

This economic situation will affect all countries unequally as each one was at a different point in the real estate cycle and the expected evolution of growth in the construction sector makes it uneven.

The Spanish construction sector has operated with limitations in the works that have been higher than those of many other European countries, which explains why the drop in production expected for 2020 (-15%) is also higher than the average.

It is trusted that part of the work not executed in 2020 will end up being executed in 2021, so the rebound in production (+ 6%) will be comparable to that of the rest of the countries. On the other hand, after having exhausted this package of overdue projects, the projection for 2022 becomes much more moderate (+ 2.5%). Consequently, production at the end of 2022 will still be 7.6% lower than that of 2019. Recovering the levels of 2019 is still an objective within reach, but it will require a longer term than the forecast period of this report.

Evolution by subsectors in the Spanish market
Production indices at constant prices, base 2015 = 100


Residential construction will start to grow in 2021

In this year 2020, residential construction will fall by around 17%, and it was one of the most dynamic sectors before the arrival of the coronavirus.

The data in the report does not rule out a productive rebound for 2021 (+ 9%) and 2022 (+ 4.5%) if we consider that in recent years very little superfluous stock has been built, and that the size and business model of the current promoters have little to do with those of 2008.

The drop in non-residential construction will be "less traumatic"

Non-residential construction could suffer a slightly less traumatic 2020 (-14%) due to the extra inertia provided by operating larger-scale projects. Furthermore, prior to the pandemic, the non-residential market was at a less advanced point in the real estate cycle than that of housing. This means that the project portfolio was not at all oversized, neither quantitatively nor in terms of risk, so that the conditions for a cancellation of projects such as that of the previous financial crisis do not exist. The expected reaction for 2021 (+ 5.5%) and 2022 (+ 2.5%) is less intense than in housing, because although there will be market niches capable of recovering ground with relative ease (logistics, offices), the rest it will cost them to get out of the stagnation. The extraordinary resources that will be allocated to health and education will give priority to spending on personnel and equipment, and will hardly be translated into construction.

Civil engineering has the potential to withstand the first impact of the crisis in 2020 better than construction (-7.5%), considering that it has been the subsector where the restrictions are being more bearable. However, in the following years the situation could be reversed, and the construction of infrastructure could have greater difficulties to recover. Public budgets and extraordinary programs will be used to cover the extra expenses due to the pandemic and its consequences in employment, with which it is very doubtful that too much priority will be given to public works. As in the case of construction, the production that could not be carried out in 2020 will serve to improve the results of 2021 (4.1%). Likewise, the local work that is expected to appear as a prelude to the municipal elections of 2023 will help to avoid stagnation in 2022 (+ 1.5%). For niche markets, it seems fair to give some advantage to those most likely to be included in the European Green Deal.

As usual, experts from the 19 countries of the Euroconstruct network will present their conclusions regarding the monitoring of the sector's progress, together with the prospects until 2022. The final program will be announced on the Euroconstruct website.