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Q2’20: Construction, real estate sectors deep in negative trajectory

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Real estate services in the second quarter 2020 declined by –17.18 per cent

 

Things are not looking up in the construction and real estate sectors as the duo recorded high negative growth in the second quarter (Q2) 2020.

 

According to latest report by National Bureau of Statistics (NBS), besides construction and real estate services, other sectors, which recorded highest negative growth in Q2’20 include transport and storage, accommodation and food services, education and trade among others.

 

New Telegraph gathered that while real estate sector has been in negative for 17 quarters out of 18 since the recession of 2016, having shrunk by 6.86 per cent, construction sector joined the league in Q2’20. According to experts, since 2016, the performance of the real estate sector has been lacklustre due to weak disposable income among consumers, which has continued to undermine the demand for housing.

 

They attributed it to COVID- 19 outbreak and the associated lockdowns,which paralysed the entire economic activities to negative growth recorded by both construction and real estate sectors in Q2 of 2020.

 

According to the report, while the real growth rate of the construction sector in the second quarter of 2020 was –31.77 per cent (year on year), lower by –32.43 per cent points from the rate recorded the previous year, the real Gross Domestic Product (GDP) growth recorded in the real estate sector in the second quarter of 2020 stood at -21.99 per cent, lower than the growth recorded in Q2 2019 by –18.15 per cent points, and –17.24 per cent points relative to Q1 2020.

 

“Construction sector contracted by -31.77 per cent in Q2 2020 from 1.69 per cent in Q1 2020 and 0.67 per cent in Q2 2019,” the report read. The NBS report has it that construction sector’s output decreased by –3.20 per cent in nominal terms (year on year) in 2020 second quarter, a drop of –46.01 point points compared to the rate of 42.80 per cent recorded in the same quarter of 2019.

 

This, it said, represented a fall of –47.46 per cent points when compared to the rate recorded in the preceding quarter, adding that the nominal growth quarter on quarter was recorded at –17.89 per cent.

 

The report added that construction contributed 6.83 per cent to nominal GDP in the second quarter of 2020, lower than the 6.86 per cent it contributed a year earlier and lower than the 7.94 per cent contributed in the first quarter of 2020. It read: “Relative to the preceding quarter, there was a decrease of –33.45 per cent points.

 

Quarter on quarter, the sector declined by -24.77 per cent in real terms, lower than the 12.12 per cent it recorded in second quarter 2019 and lower than the 1.74 per cent recorded in Q1 2020.

 

“Its contribution to total real GDP was 3.23 per cent in the second quarter of 2020; lower than its contribution of 4.45 per cent in the same quarter of the preceding year, and lower than in the immediate past quarter where it contributed 4.08 per cent.”

 

Meanwhile, in nominal terms, the report read that real estate services in the second quarter of 2020 declined by –17.18 per cent, or –19.27 per cent points lower than the growth rate reported for the same period in 2019 and lower by –18.31 per cent points compared to the preceding quarter.

 

“Quarter-on-quarter, the sector growth rate was –1.24  per cent. The contribution to nominal GDP in Q2’20 stood at 5.23 per cent as against 6.35 per cent recorded in Q2’19 but same as the value in Q1 2020,” it read.

 

Quarter-on-quarter, the report said the sector declined by –2.71 per cent in the second quarter of 2020, adding that It contributed 5.30 per cent to real GDP in Q2’20, lower than the 6.43 per cent it recorded in the corresponding quarter of 2019. According to the report, transportation and storage sector contracted by -49.23 per cent in Q2’20 from 2.82 per cent in Q1’20 and 8.02 per cent in Q2’19

 

It pointed out that six activities that made up the transportation and storage sector were road transport; rail transport and pipelines; water transport; air transport; transport services; and post and courier services.

 

Also, mining and quarrying sector contracted by -6.60 per cent in Q2’20 from 4.58 per cent in Q1’20 and 7.00 per cent in Q2’19 “Cement under manufacturing sector contracted by -5.54 per cent in Q2’20 from 1.67 per cent in Q1’20 and 1.58 per cent in Q2’19,” the report read.

 

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