Market environment impacted by COVID-19
The construction sector varied from country to country in 2020. The market environment was largely characterised by negative growth figures as a result of the COVID-19 pandemic.
In November 2020, Euroconstruct forecasted a decrease in building construction for Europe in 2020 of -8.8%, an improvement on the estimation made in mid-2020 (-12.7%). At -10.5%, new construction reported a stronger decline than renovations (-7.3%). Both non-residential construction (-9.2%) and residential construction (-8.6%) saw a decline in 2020. According to Euroconstruct, the following countries that are important to Geberit in terms of sales experienced mixed results in 2020: a strong decline was seen in the United Kingdom (-22.4%), France (-14.4%), Italy (-9.7%) and Belgium (-9.1%), with slight decreases in Austria (-3.3%), the Netherlands (-3.1%), Switzerland (-2.3%) and Germany (-1.6%). According to the figures in the October 2020 edition of the IMF World Economic Outlook, a significant share (around 40%) of the global decline in economic performance originated in Europe, with a GDP growth rate of -7.5%.
Construction output and Geberit net sales in Europe 2016–2020
Source: 89th Euroconstruct conference in Stockholm (SE), June 2020
Click legend items to show and hide data
Of the total European construction volume of EUR 1,566 billion in 2020, around 80% was generated by building construction. The ratio of residential to non-residential building construction remained the same at around 60 to 40 percent. New construction as a share of total building construction continued to lag behind the renovation business in 2020.
Total construction output Europe 2020
Source: 90th Euroconstruct conference in Munich (DE), November 2020
According to estimates by the Bureau of Economic Analysis, gross domestic product (GDP) fell by -3.5% in the US (previous year +2.2%). Investments in building construction increased by +4.7% according to figures from the United States Census Bureau. Within building construction, investments in residential construction increased by +11.8%. Investments in non-residential construction remained constant (previous year -2.4%). The COVID-19 pandemic impacted the accommodation, office buildings and retail sectors in particular. The healthcare/hospitals and schools/universities segments, which are important for Geberit, developed with +4.3% substantially stronger and with -0.8% substantially weaker, respectively, compared to the previous year (+1.2% and +4.1%, respectively).
In the Far East/Pacific region, economic growth amounted to -2.0% in 2020. While negative, this figure was still a significant improvement on global economic growth (-4.6%). At just under 20%, less than one-fifth of the global economic decline originated from the Far East/Pacific region (previous year 60% contribution to growth). China continued to grow (+1.9%), although at a much less pronounced rate than in the previous year (+6.1%). The Chinese residential construction sector grew moderately in both tier one and tier two cities. At 2 to 3%, growth in tier one cities was below that seen in tier two cities (5 to 6%) due to the lower availability of plots for new buildings.
Following moderate growth in the previous year, economic growth in the Middle East/Africa region declined by -5.4% in the reporting year.
(The aforementioned figures covering the world economy and the performance of the Far East/Pacific and Middle East/Africa regions were published in the October 2020 edition of the IMF World Economic Outlook.)