German Construction Industry Remains on Its Path of Growth during the Coronavirus Recession

DIW Weekly Report 1/2 / 2021, S. 3-13

Martin Gornig, Claus Michelsen, Laura Pagenhardt

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Abstract

The coronavirus pandemic has led to a deep worldwide economic crisis. In many countries, the construction industry has been impacted. In Germany, however, construction activity is one of the economic sectors that has remained largely stable: In 2020, the total construction volume in Germany is expected to have increased by around four percent to 444 billion euros after increasing by around eight percent in 2019. DIW Berlin’s most recent construction volume calculation expects an increase of almost three and five percent for 2021 and 2022, respectively. This growth is due to Germany’s decision to allow construction work on site to continue as well as to allow trade and repair companies to continue conducting business in households in adherence with hygiene measures. Nevertheless, the pandemic is still affecting construction firms; commercial construction in particular is likely to not escape unscathed. The overall performance of non-residential construction, however, is likely to depend primarily on the public sector. If federal and state government capital spending is increased and local governments’ budget holes are plugged, as was previously planned, public construction should stabilize construction activity.

Laura Pagenhardt

Research Associate in the Forecasting and Economic Policy Department

Claus Michelsen

Head of Department in the Forecasting and Economic Policy Department

Martin Gornig

Deputy Head of Department in the Firms and Markets Department



JEL-Classification: E32;E66
Keywords: Construction industry, residential construction, public infrastructure, economic outlook
DOI:
https://doi.org/10.18723/diw_dwr:2021-1-1