The South African construction industry is expected to bounce back in 2021, after being the worst-performing industry in the economy in 2020, with construction GDP down a crippling 20.3% in the year.
This signaled the industry’s fourth consecutive year of decline.
David Metelerkamp, the senior economist at construction market intelligence firm Industry Insight, is however anticipating a reasonable bounce back by the civil industry, reports Moneyweb.
Statistics SA data shows that the civil industry contracted by just more than 18% in 2020 while investment in the residential building industry contracted by 20.9% and the non-residential building industry by 25.3%.
Industry Insight attributes the construction industry GDP being down in 2020 to the fact that, unlike other countries, the construction industry was not declared an essential service in South Africa during the hard lockdown period in April and May 2020 and the government and the private sector disinvested massively from both the building or civil infrastructure segments of the industry.
Metelerkamp says the civil industry performed slightly worse than forecast in 2020 while the performance of the residential and non-residential sectors, despite being extremely poor, was slightly better than forecast.
He says the civil and building industries are both coming off a low base and expects “an about 10% bounce back” by the civil industry in 2021 but opportunities for an improvement in the building industry to be limited and for it to achieve “low single-digit growth in 2021”.
Despite slightly improved prospects for the civil industry, Metelerkmap stresses that investment in the civil industry will get “nowhere near to previous levels”.
He says about R170 billion was invested in the civil industry in 2020 and Industry Insight is only forecasting this to improve to R150 billion in 2025.
Metelerkamp says building prospects are very limited and “a big bounce back” in private sector demand for housing and shopping centres unlikely.
“We have definitely moved onto a lower growth path going forward for the next five years at least, despite building coming off a very low base.”