In early March, the epicentre of the Covid-19 pandemic shifted from Asia to Europe, which saw a sharp increase in the number of confirmed cases. In May, the number of confirmed Covid-19 cases stood at 1.8 million across Europe and over 160,000 deaths. In response to the outbreak, several governments across the region implemented strict lockdown measures, including the closure of significant parts of the economy.
The Covid-19 containment measures saw widespread restrictions on construction activities across most European countries, the lockdown measures coupled with the virus outbreak led to severe disruption in construction output across the continent. In March 2020, production in the construction sector decreased by 12% in the European Union compared to February 2020. On a year on year basis, output fell by 13.4% in the European Union.
Construction output fell sharply in most European countries, the largest decreases in construction output were recorded in France and Italy in March. On a month-on-month seasonally adjusted basis, in France construction output fell by 40.2% while in Italy output fell by 36.2%. However, exceptions emerged in March, with some countries recording an increase in output despite the virus outbreak. The Netherlands and Germany, where construction activities were exempt from the lockdown, both recorded an increase in construction output compared to February 2020, at 1.5% and 1.8% respectively. The March data reflect the extent to which construction sectors were affected by lockdown measures or exempted.
The Covid-19 virus outbreak has brought severe disruption across Europe, as the strict quarantine measures imposed across the region led to construction projects being temporarily halted and new projects being delayed. The data release for April is likely to show that conditions worsened dramatically compared to March. GlobalData has revised down its forecast for the Western European construction industry with a contraction of 5.5% now expected, while in Eastern Europe the contraction is likely to be less severe with a contraction of 2% forecasted. Assuming that the outbreak of the virus is contained within the second quarter, there is the potential for a recovery in the second half of the year. There remains a downside risk for the forecast, particularly if a second outbreak occurs in the latter part of the year coupled with the re-imposition of lockdown measures across the region.