New Market Report: Brazil Infrastructure Report Q4 2014

From: Fast Market Research, Inc.
Published: Tue Oct 14 2014

Fundamental issues in Brazil's business environment will continue to undermine growth potential in the country's construction sector. Despite the success of transport concessions and power auctions, which will help to revive the construction sector from recession in 2015, this recovery is unsustainable over the longer term. We anticipate a longer term slowdown as fundamental weaknesses emerge and financing sources are exhausted.

Despite a four year BRL959bn PAC II investment programme, which according to June 2014 data was 86% executed as of April 2014 when the programme ended, the construction sector has continued to see only weak growth. We are now estimating a recession for 2014 as a whole, with -3.0% anticipated, following an exceptionally week first half of the year. With elections to take place in October, we do not anticipate any substantial recovery until 2015.

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Between 2015 and 2018, we believe the USD235bn concessions programme will generate higher growth, as construction gets under way on major road and airport projects. Over the coming year, additional port and rail projects will also be tendered. In 2013, BRL80bn in concessions were awarded, followed by BRL12.3bn in the first four months of 2014, and BRL111bn more are expect before the end of the year - although delays are likely given legal hurdles related to port concessions and plans to re-design the rail tenders into smaller packages. As such, we are forecasting growth to average 3.8% between 2015 and 2018, compared to an average of 2.2% between 2011 and 2013.

Residential construction rebound

Brazil's residential construction market has also been a net negative for the construction sector, with an interest rate hiking cycle combined with weaker economic growth hitting demand for housing. Construction of new housing has fallen sharply, with housing starts in Sao Paulo falling 26% in the first seven months of the year, compared with the same period in 2013. House prices, which have...

The Brazil Infrastructure Report features Business Monitor International (BMI)'s market assessment and forecasts covering public procurement and spending on all major infrastructure and construction projects, including transportation and logistics by land, sea and air; power plants and utilities, and commercial construction and property development. The report analyses the impact of regulatory changes and the macroeconomic outlook and features competitive intelligence on contractors and suppliers.

BMI's Brazil Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Brazilian infrastructure and construction industry.

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You may also be interested in these related reports:

- Singapore Infrastructure Report Q4 2014
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Company: Fast Market Research, Inc.
Contact Name: Bill Thompson
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