The construction materials industry was deeply affected during the state of emergency when the stores   were officially closed. Turnover decreased during this period by 82%. It is true that online sales increased in the same period by 10 times compared to the period before the pandemic and maintained the positive trend after the reopening of retail units, but online sales account for only 1% of total sales. The problem is that online sales is only for specialists, and the standardized range of products offered online only covers 70 thousand positions. Normally, non-professional consumers prefer to make their shopping choices within the store. Even though the sales volume recovered in June-July, the profit of enterprises in the sector could be 4 times lower than last year.

Given the dynamics of sales of construction materials, the impact of the pandemic would not be felt in the current year, given that the demand for building materials is shown at the final stage. However, the slowdown in construction, both for objective reasons (declining purchasing power) and subjective reasons (delays in the issuance of building permits), will produce a noticeable impact in the coming year. A beneficial solution in this regard would be to maintain the “First Home” project because one could see the trigger effect of this initiative on the construction sector in general, and on construction materials in particular.

Sanitary protocols are considered important, allowing both the isolation of individual cases of illness and the quarantine of persons in direct contact with them. Thus, the shutdown of activity and partial remuneration of employees who are furloughed are avoided.

Due to the stocks of raw material, production did not suffer. About 30-40 components are used in the production of finishing materials, most of which are imported. Only chalk and gypsum are supplied from quarries in the Republic of Moldova, but one can only talk about higher production volumes in the context of access to foreign markets. Currently, the free trade agreement with the CIS states applies standards that are incompatible with modern production, giving undeserved advantages to producers in Russia and Kazakhstan. Although the Romanian market is attractive (high transport costs do not allow a wider geography), the customs procedures applied to the entry of goods in Romania (3-5 days) undermine the reliability of investments in this direction.

Cement production is performing badly for reasons unrelated to pandemic. The share of cement production imported from Ukraine on the local market is increasing, reaching 10-20%, while cement exports from the Republic of Moldova have already been blocked by Ukrainian courts through anti-dumping actions. In line with them, Moldovan cement is subject to tariffs of 94.6% for a period of 5 years. The Republic of Moldova did not initiate equal measures and did not challenge the Ukrainian decision at the WTO, although the trade balance with Ukraine is in favor of the latter. According to experts, Ukrainian cement has a lower quality compared to the Moldovan one, and its use in construction can negatively affect the seismic stability of buildings.

* This information is collected during the discussions conducted by the experts who elaborate the Impact Study of the COVID-19 pandemic on the sectors of the economy. The data can be taken from the website www.consecon.gov.md only with the obligatory mention of the source “Economic Council under the Prime Minister of the Republic of Moldova” and the specification that “The impact study of the COVID-19 pandemic on the economic sectors is carried out by The Economic Council jointly with the Ministry of Economy and Infrastructure, with the support of the European Bank for Reconstruction and Development and the United Kingdom Government Fund for Good Governance. ”

The Secretariat of the Economic Council to the Prime Minister is supported by the European Bank for Reconstruction and Development, funded by the UK Government’s Good Governance Fund, and the International Finance Corporation’s Investment Climate Reform Project funded by the Government of Sweden’s International Development Agency.

The Secretariat of the Economic Council to the Prime Minister is supported by the European Bank for Reconstruction and Development, funded by the UK Government’s Good Governance Fund.