Economic impact of COVID on the construction sector in India

Abstract

COVID 19 and the quarantine lockdown has disrupted tourism and hospitality industry, community behaviors, supply chain industry and all the general goods and service provider industries internationally. These disruptions have significantly impacted international markets and has thrown the world economy out of balance. This was an unexpected shock which affected the demand and supply side of the economy. The world economy was already reeling under the fear of a recession in 2019 and COVID 19 has increased the risk of a massive recession happening because of complete shutdown of all economic activities. The supply of raw materials will be reduced because of the lockdowns and this will affect output from manufacturing companies thus affecting the GDP of countries. This reduction in supply might lead to a demand shock across the discretionary goods segment. The first country to demonstrate the economic impact of the pandemic was China with the Purchasing Managers Index (PMI) of the country reaching below 50. This has indicated the beginning of showing recession like symptoms in China. As China has a manufacturing focused economy, the disruption of logistics and labor impacted it severely. Even though the issues started in manufacturing, it quickly moved on to the services sector. From the PMI data, we can see that both the services and manufacturing markets are facing growing economic issues. The change in social distancing norms can ease the demand shock and solve these issues