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2020 has left a residual economic impact on the world, with Latin America and the Caribbean being no stranger to the devastation left in its wake. The Caribbean experienced an economic contraction of -7.9% on average, with tourism down 60%-70%.
The Caribbean attempted to bounce back from the initial economic devastation by reopening boarders in the third quarter of 2020. However, it is unlikely we will see any subsequent recovery until the third quarter of 2021 due to the resurgence of the pandemic, failure to contain new infections, the imposition of new lockdowns, and the consequent change in people’s behaviour.
The International Monetary Fund (IMF) forecasts a growth of 3.7% for the region in 2021, although it is anticipated that output will not return to pre-pandemic levels until 2023. As well, GDP per capita is not expected to recover until 2025. Construction in the region has been affected equally with many projects being suspended and others slowing due to difficulties in labour movement and material delivery. Governments throughout the region have tried to minimise this by increasing investment in civil / infrastructure projects and pushing forward with aid-assisted developments; however, without the main stay of tourism, the impact has been significant.
During the first half of 2021, construction costs have remained relatively stable throughout the crisis but construction schedules have extended and lumber and steel priced have surged with new COVID-19 protocols slowing productivity and – more significantly – the availability of materials and long lead times causing logistical challenges. We expect to see an increase in construction costs in the second half of the year.
With the strong regional commitment to the vaccination programme, containing the pandemic, along with the relaxing of COVID-19 restrictions in the region’s key markets as the year progresses, the 2021/2022 tourist season is looking positive.