COVID-19's impact on contractors

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July 2020

Challenging outlook in 2020. The construction and infrastructure (C&I) sector has been badly impacted by COVID-19, through movement restrictions, supply chain disruptions and project delays. As a result, Fitch Solutions has cut the range of C&I growth expectations for ASEAN countries from -10.3% to 2.1% in 2020.

Government measures to shore up economies. Though 2020 is expected to see a sharp pull-back in economic activities and a significant adverse impact on the C&I sector, we think government relief measures (such as wage subsidies) would help defray cost and debt moratorium could help limit downside for the sector. A key variable is the containment of COVID-19 and the potential second wave post the opening of economies.

Infrastructure spending could pick up post COVID-19 to underpin recovery. Once COVID-19 is contained, we see the potential for government infrastructure spending on strategic or high profile projects to pick up momentum. This could help spur a recovery for the construction sector and the broader economy.

Looking beyond COVID-19, we think selected trends such as digitalisation, recalibration of supply chains, rising adoption in offsite construction and increasing focus on sustainability could accelerate and enable early adopters to position well for the eventual recovery. There could also be pockets of opportunities in construction of healthcare facilities and green buildings.

Companies within the construction and infrastructure sector looking to enhance their working capital cycle and positioning for a potential pick-up in construction activities post the containment of COVID-19 can contact us here.