The construction industry in South Africa to recover

The construction industry in South Africa is on track to grow by 6.2% in real terms in 2021. This will reverse the four-year trend of decline, including a 20.3% downward slide in 2020.

Despite this good news, analysts have indicated that the expected growth is more a reminder of how far down the sector plunged in 2020 than it is a cause to rejoice. It is a reminder of how much damage the Covid-19 pandemic caused the sector and how much it has to recover from. 

Still largely influenced by the progressive effect of the pandemic on construction projects, the sector’s value-add contracted by 17.5% year on year (YoY) in Q1 2021. This followed an earlier contraction of 19.8% in Q4 2020.

The construction industry also suffered a great deal of setbacks in terms of employment, leaving over 7.2 million people unemployed, making up a 32.6% unemployment rate in Q1 2021.

As part of measures to spur a recovery in the sector, the government has earmarked ZAR791.2 billion (US$45.3 billion) in its 2021 budget for infrastructure development. 

The highlighted sectors and projects include the repair and replacement of the existing dam, bridge and railway line, housing, energy, agriculture, transport, water and sanitation, and digital infrastructure. This huge capital spending will bring on annual average growth of 3.4% between 2022-2025.