A report just released by GlobalData a leading data and analytics company has further cut its growth rate for Nigeria’s construction industry to 12.8 percent and foresees that weak public investment alongside limited foreign direct investment (FDI) amid the global economic downturn is pushing Nigeria into a steep recession.
Yasmine Ghozzi, Economist at GlobalData, said: “The negative impact from the pandemic, lockdown measures and low oil prices, have already been felt across all sectors, especially in retail and real estate.
Nigeria’s economy contracted by 6.1 per cent year on year in Q2 2020, the steepest in the last ten years. While the lockdown has been eased in the wake of heavy economic losses, continued rise in cases especially in Lagos meant the local economy is yet to fully re-open.” the report showed.
On a larger scale, GlobalData, noted that construction output growth forecast for Sub-Saharan Africa (SSA) in 2020 has been cut down to 4.9 per cent from previous forecast of 0.7 per cent.
Construction industry in Sub-Saharan Africa is expected to enter a region-wide deep recession in 2020 as a result of the COVID-19 pandemic driven by several headwinds most of which are related to policies imposed to contain the spread of COVID-19.
Ghozzi, comments: “The closure of borders adversely affecting trade flows and tourism, the collapse of global demand and the disruption of supply chains have also impacted the SSA region. The lingering effects of COVID-19 on travel, trade and investment, along with governments’ limited fiscal space and soaring debt levels, will still be felt in 2021.”
Construction output is expected to grow by 4.6 per cent in 2021, as, once the industry is permitted to operate at normal or near-normal levels, there could be a sharp recovery in output levels compared to periods when works were not permitted or were severely restricted.
This will particularly be the case in when comparing Q2 2021 output levels with those in Q2 2020 in Nigeria and South Africa where activities were completely halted in time of imposed strict lockdown. However, despite the expected growth in 2021, output will still be below 2019 levels.