Construction sector fell 9.8% in the first half of 2023, according to Capeco

He construction sector continues with negative figures: records a decline of 8.4% at the end of June and a cumulative drop of 9.8% in the first half of 2023according to estimates by the Peruvian Chamber of Construction (Capeco).

According to Capeco’s Construction Economic Report #67, the result for the sixth month of the year was affected by a 12.7% drop in cement consumption, and a 3.9% advance in public works, after having experienced a drop of 8.9% in May.

“In the case of cement, its consumption would have been in a negative state in 11 of the last 12 months, and consecutively from September 2022 to June 2023,” Capeco commented.

According to the business union, for construction to close this year with 0% growth, as estimated by the Central Reserve Bank of Peru, it should advance 7.9% in the second semester. However, Capeco forecasts that the sector will suffer a contraction of 2.8% in 2023.

Employment in construction has also shown a significant decrease, registering a decline of 12.8% during the moving quarter from April to June 2023. In this same period, suitable employment also fell by 11.8%, while underemployment did so by 15.7%.

Factors driving the drop in construction

According to Capeco, among the factors that contributed to the negative performance of construction are the social unrest at the beginning of the year after the coup attempt by Pedro Castillo; as well as the imbalances produced in the real estate market and in public works due to the rise in the prices of construction materials.

The loss of purchasing power and the increase in poverty levels also had an influence, especially in Metropolitan Lima, and the change of authorities as a result of regional and municipal elections and the assumption of a new national government.