Covid-19 Impact on Europe and CIS Construction Chemicals Market

Pre-COVID Construction Chemicals Market in Europe and CIS

The Europe construction chemicals market was estimated to witness a healthy growth, before the outbreak of COVID-19 Impact. Major factors driving the market considered were the budding construction industry in Germany and France, and increased adoption of innovative construction procedures. Increasing focus on sustainable materials was also one of the factors which paved the way for the market growth before the spread of pandemic in the region. The construction infrastructure gave a boost to the construction chemicals market owing to the announcement and investment of various construction infrastructure projects in the region.

For instance, the 20-year Turkey Urban Renewal Project, a far-reaching plan to demolish some 7 million buildings and rebuild earthquake-resistant structures in their place, began in 2012 with an estimated cost of $400 billion. Additionally, after 17 years of construction, the Gotthard Base Tunnel opened in Switzerland on June 1, 2016. At 35 miles long, it's both the longest and deepest train tunnel in the world, offering unprecedented efficiency when traveling through the Alps. Russia's Moscow International Business Center, or "Moscow City," has been in development for more than 25 years and has seen $12 billion in investments. It contains many of the tallest buildings in Europe and is still only halfway finished. These projects completion and plans were the result of a healthy growth in the construction sector in Europe.

Present COVID Impact on Construction Chemicals Market in Europe and CIS

While the immediate impact of the Covid-19 lockdown on the construction sector has been strict, the crisis may ultimately prove to be a catalyst for radical change. That was the hope shared by an industry leading panel, convened last week to consider the near-term effects and probable legacy of the crisis. Recapping the results of the RICS Global Construction Monitor for Q1 2020, the Institution’s Chief Economist, Simon Robinson, cautioned that the macro-economic picture remains fluid. “There’s certainly going to be a bounce back as construction sites return to activity. But in terms of output beyond that, there’s a lot of question marks about demand, funding and just how sustainable the economic recovery will be.”

Domenico Campogrande, Director General of the European Construction Industry Federation (FIEC), concurs. The FIEC is currently conducting weekly surveys of its membership in order to gauge industry sentiment across the EU27. The findings have thus far made for sobering reading. The situation across Europe is very diverse. There are countries where activity has continued more or less as usual, and others where everything has stopped completely. It’s difficult to give an overall picture, but we expect a decrease in activity for this year 2020, compared to 2019, of around 20%. It’s a big number, and the figures for 2021 also look quite bad at this stage.

Measures taken to recover economy from COVID impact

All European Union countries are undergoing severe output losses as a consequence of the COVID-19 crisis, but some have been hurt more than others. In response to the crisis, EU leaders have agreed on a Recovery and Resilience Fund (RFF), which will help all EU countries, but those hit hardest will benefit most. This Policy Contribution explores why some countries have been hit economically more than others by COVID-19. Using statistical techniques described in the technical appendices, several potential explanations were examined: the severity of lockdown measures, the structure of national economies, the fiscal capacity of governments to counter the collapse in economic activity, and the quality of governance in different countries. EU found that the strictness of lockdown measures, the share of tourism in the economy and the quality of governance all play a significant role in explaining differences in economic losses in different EU countries. However, public indebtedness has not played a role, suggesting that that the European Central Bank’s pandemic emergency purchase Programme has been effective. EU used its results to explore why some southern EU countries have been more affected by the COVID-19 crisis than some northern countries. Depending on the pairs of countries or country groupings that we compared, we found that differences in GDP losses were between 30 and 50% down to lockdown strictness, between 35 and 45% to the quality of governance and between 15 and 25% down to tourism.

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