The economic sector of construction, engineering and architecture loses 150M euros per day due to COVID-19

30/04/2020

The economic sector of construction, engineering and architecture loses 150M euros per day due to COVID-19

image The economic sector of construction, engineering and architecture loses 150M euros per day due to COVID-19

The economic sector of construction, engineering and architecture loses 150M euros per day due to COVID-19

The economic sector of construction, engineering and architecture loses 150 million euros a day since the State of Alarm was decreed as a result of the COVID-19 epidemic. This figure is obtained thanks to the sector-specific calculator, designed by the Madrid Capital of Engineering, Construction and Architecture Association.

The economic impact has been uneven depending on the changes in the alarm state. During the first stage, from March 14 to 29, which indirectly affected the ICA sector (engineering, construction and architecture), a production drop of 30% is estimated.

In the second stage, from March 30 to April 8, called “economic hibernation”, the sector was directly affected with a fall in production of 60%, especially in the construction phase of the projects, since the services of Engineering and architecture remained practically the same.

The third stage allowed to return to activity, estimating, however, a 20% drop in production, lower than that of the first period due to the decrease in uncertainty in the reactivation of projects and establishing all security measures and health over workers. Since April 26, we are in times of apparent normality for the sector, estimating a decrease in activity of 10% until May 10, the expected end date of the State of Alarm.

In the whole of 2020, the production of the ICA sector could have reached 184,200 [1] million euros – 505 million daily – generating employment of 1.43 million jobs; These figures represent 8.2% and 7.3% respectively of the national total.

With the estimates of the fall in activity studied for each period, production would have been reduced by 2,300, 3,080 and 2,570 and 760 million euros in each of them, in total, 8,700 million euros, equivalent to 4.7% of the ICA annual production. The daily impact would suppose a fall of 144, 280, 151 and 44 million euros respectively.

Employment, meanwhile, would have been affected with a reduction of 404,000 jobs in the first period, from 783,000 in the second, from 427,000 in the third and 142,000 in the current one [2].

It would be convenient to conclude this analysis with the final forecasts for the sector. Under current conditions, production in 2020 would reach 175,500 million euros, while 66,951 full-time jobs would be reduced to generate it.

The potential recoverable nature of the sector could be affected by the deterioration of the productive fabric, by the suspension of certain projects due to lack of financing and by the potential fall in the number of public and private tenders. The correct resolution of these aspects are critical for improving the behavior of the sector.

 

For this reason, the impact of confinement in particular and the global epidemic on the sector should be gradually assessed. The effects on business management and the consequences on employment will be studied; the availability of public resources to finance real investments and the possible need to search for financing alternatives.

About Madrid Capital of Engineering, Construction and Architecture Association

We are the sum of important companies, Madrid and Spanish entities, that have joined forces to:

International positioning of Madrid and Spain as a world reference in the field of engineering, construction and architecture.

Training leadership of Madrid and Spanish Universities and Business Schools.

Positioning of Madrid and Spain as a hub of innovation, sustainability and responsibility.

Exposing new models of city to society.

It is a project that had its origin in 2016 materialized in 2020 in the form of an Association, taking advantage of the fact that Madrid and Spain are one of the main world exponents of engineering, construction and architecture.

[1] Source: Own estimate based on 2018 National Accounts (INE) data.

[2] Job losses show the value in each period and are not cumulative.