Market volatility due to COVID-19
The year has been characterised by rapidly changing market demand and volatility in activity by segment in our APAC markets, associated with the impacts of COVID-19.
Government support and low interest rates drove an upturn in demand within the building segment during the second half of the year. In contrast, infrastructure has been impacted by low business confidence and lighter than expected government stimulus. The agriculture segment had a mixed performance due to adverse weather conditions in key geographies.
From contraction to recovery in Australia
The COVID-19 pandemic led to a severe contraction in economic activity in Australia during March. An aggressive approach to virus containment resulted in a series of strict regional lockdowns across the year, impacting local business confidence and market activity.
Economic conditions recovered slowly as containment measures were eased in May, and government fiscal policies provided much needed support to the Australian economy.
Resilient economy in New Zealand
Although the New Zealand economy was significantly impacted by a four-week nationwide lockdown in April, the balance of the year saw a resilient economic response as the building market rebounded from the early uncertainty.
The New Zealand Government’s COVID-19 stimulus programme prioritised employees and impacted businesses with reduced focus on major infrastructure in 2020. As a result, fewer major infrastructure projects went ahead in the year. However, a higher dairy pay-out improved confidence among farmers, encouraging them to invest in new farm water management systems.
Low interest rates also helped boost residential new builds, although restrictions on migration due to the pandemic have hampered efforts to accelerate building demand overall.