Off-highway Research report points to China as only positive based on stimulus spending in a shrinking world market for 2020
Sales of construction equipment are expected to fall 16% globally this year due to the effects of the Covid-19 pandemic on the general economy and construction sector, with almost every country in the world affected except China, according to a study by Off-Highway Research.
The market research and forecasting company said the while the global scenario is grim, it would be worse if it were not for China, where stimulus spending will lift the market by an expected 14%. This is expected to take machinery sales in China to their highest since the previous stimulus boom in 2010-2011.
Before the outbreak of the pandemic, equipment sales in China were originally expected to fall this year, with the market passing its cyclical peak.
Chris Sleight, MD, Off-Highway Research said: “The Chinese market has seen remarkable growth since April and this will certainly cushion the blow as far as the global industry is concerned. We are forecasting a soft landing in 2021, but we are also mindful of the long and painful recession which followed the 2010-11 stimulus boom. I hope the lessons from history have been taken on board.”
According to the study, the impact of Covid-19 is much starker globally when seen without China in the equation, with 2020 volumes forecast to fall 27% year-on-year in the rest of the world. While this would take volumes to their lowest since 2010, the study expects growth to return in 2021.
“These forecasts are based on two key assumptions. First, we assume the worst of the Covid-19 pandemic is behind us and that, if there is a second wave of infections in the Northern Hemisphere winter, actions to address it will be much more targeted than a blanket lock-down,” said Sleight.
“Second, we assume that the policy response from governments around the world will remain intelligent and supportive. Viable businesses must be helped through the current difficulties, jobs must be protected and we now look for stimulus spending to reinvigorate economic growth.”