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Brazil and the world are suffering from the negative impacts caused by the new coronavirus (covid-19) and, unfortunately, the economy and the construction industry have been significantly affected by this new scenario.
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Moreover, according to experts, this could be the largest unprecedented economic crisis in the current history of the population. To emphasize this finding, it is enough to analyze last year’s indices.
After surging 106% on the Stock Exchange in 2019, which was even the largest sectoral increase of the Ibovespa, construction companies started 2020 at a rapid pace. However, as the pandemic evolved, the indices plummeted and interrupted this growth.
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Historic bankruptcy of Centauro shocks the market, and the century-old company puts more than 500,000 products, machines, and complete infrastructure up for online auction.
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Abandoned house for 15 years disappears in the woods, shocks owner with unrecognizable scenery and is reborn in an intense transformation after almost 90 hours of work in just 10 days.
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In just three hours, a natural stone floor transforms the entrance of the house with an organic effect, immediate drainage, and a sophisticated non-slip finish that doesn’t puddle water, dries quickly, and impresses with the final result.
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‘Interlocking brick’ made of earth arrives in the construction industry with cost reductions of up to 40% on the project.
In addition, it is worth highlighting that the main stock exchanges in the world are experiencing drastic declines – the Dow Jones, for example, dropped by 23%, and those in Europe averaged 30%.
From this scenario, according to the UN Conference on Trade and Development (Unctad), the world could face a loss of US$ 2 trillion due to social isolation and economic paralysis – especially among smaller businesses, such as LED tape.
What can the construction industry expect in the coming months? What are the major indices? Are there ways to recover the economy? To answer these and other questions, keep reading this post and see the overall scenario of the construction industry in the country. Happy reading!
Indices and Effects of Covid-19 on the Construction Industry
There is no certainty about when the economy will start to turn again – especially in a country like ours, which suffers from various economic instabilities in different sectors (such as in chiller maintenance, for example) and already established crises.
Thus, the construction industry has been significantly affected by the evolution of the virus. To illustrate, after experiencing 5 years of difficulty, between 2013 and 2018, many companies were optimistic about market index growth.
However, the crisis scenario completely changed this perspective, leading most construction companies to postpone launches, new projects from major construction firms, and, in some cases, suspend ongoing works.
Furthermore, another point worth noting is the number of construction projects in the city of São Paulo, which notably experienced a significant slowdown in the approval of new projects from major construction firms, caused by the pandemic.
How Can the Construction Industry Face the Pandemic?
Real Estate Investment Funds (FLLs) are the fastest-growing market in Brazil. And, while the Ibovespa indices indicate a decline of 7% per day – due to the pandemic – the IFIX (the main benchmarking for FLLs) saw a decrease of -1.5%.
Therefore, these indices demonstrate a significant capacity for performance in the investment sector – even amid the crisis. Moreover, the losses that are expected now could be mitigated within a period of 12 months, providing substantial relief.
According to experts, the construction industry can face the crisis with a sort of ‘protection screen’, if the upper middle class invests in real estate and new projects from major construction firms since they are valuable for the economy, especially during times of crisis.
On the other hand, acquiring land and new projects from major construction firms can also be an excellent strategic source. After all, it is common for large developers – especially at this moment – to reduce the value of installments.
The evolution of the new coronavirus has brought numerous challenges to the population, businesses, and sectors as a whole.
However, it is possible to overcome this moment. And the construction industry – a strategic sector that generates millions of jobs – will play a fundamental role in driving the economy and creating new projects from major construction companies.
This article was written by Beatriz Barros, Content Creator at Soluções Industriais.
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