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Casalco forecasts $1.2 billion investment in the construction sector by 2022

Despite the COVID-19 pandemic, and the economic blow it meant for all nations, El Salvador experienced a rapid economic recovery in 2021 in most sectors; this was also accompanied by development.

The Salvadoran Chamber of Construction (Casalco) confirmed that in the sector they represent, growth projections to the fourth quarter of last year ranged between 6 and 7%, although closing data are not yet published.

The executive director of Casalco, José Velásquez, explained in the inauguration of a housing project in Santa Tecla that after having stopped some works in 2020, when the pandemic reached the most critical moments, the following year the sector started executing mitigation projects and thus resumed activity.

“This project that we have next door, which is called Vías del Carmen, was precisely one of those that was stopped with the pandemic and that managed to be executed in 2021. So, employment has been able to recover and now we are at stable levels”, Velasquez emphasized.

On the other hand, he highlighted that in 2021 around 22,500 direct jobs were reported in the construction sector, which were registered in the Salvadoran Social Security Institute (ISSS). However, according to the Chamber’s data, the people hired reach 100,000 with the jobs generated indirectly.

“We can infer that there are 100,000 jobs generated around the construction industry as such. To the direct jobs we can add the annexed businesses, the supply chain, that is to say, we add three indirect jobs to each direct one”.

Velásquez assures that the growth projections for this year are similar to those of the previous year. Also, according to the union’s figures, $1.2 billion between public and private investment is expected for 2022.

Challenges for 2022

Casalco’s executive director points out that, although construction investment projections for 2022 are similar to 2021, there are many challenges -especially external- that they will have to face as a sector.

Currently, foundation projects are divided into 80% residential and 20% between commercial and offices. This, according to Velasquez, is a pandemic effect.

“The commercial and office sector was affected by the pandemic, as it was left with the hybrid mode of operation. Many people have been left working from home, they even became classrooms,” he said.

On the other hand, the conflict between Ukraine and Russia has hit the supply of imported materials even harder. Casalco reports that the increase in prices construction products and tools can hover between 10 %, 15 % up to 50 %.

“Ukraine is one of the largest suppliers of billet, which is the raw material used for steel. Steel has had increases of 25 %”, the executive pointed out.

The increase in oil affects in several ways. For example, the costs of products made with hydrocarbon derivatives, such as PVC, are increasing; and freight, which used to cost $2,500, today can be worth up to $25,000, according to the union leader.