Abstract
Industry Forecast Scenario
Like other countries, Brazil is suffering the
ill effects of the global financial crisis and the subsequent
global
economic downturn. The situation is exacerbated by the fact that the Brazilian
economy is so
strongly linked to the US economy, the epicentre of the
current problems. Private sector-led construction
activity is now taking a
big hit, because of a lack of investment funds, as well as reduced
confidence
among builders and end-buyers of commercial properties. Against
such a backdrop, BMI now predicts
that Brazil’s economy will
contract in 2009. However, the drop in private sector activity should be
partly
offset by strong ongoing support from public sector investment in
infrastructure. The government
launched the so-called growth-acceleration
programme (PAC) in 2007. The PAC programme
encompasses building
initiatives such as airports and ports nationwide, the repair of highways,
the
development of energy projects in the north, and the provision of
housing, water and sewage systems to
benefit poorer Brazilian
communities.
We have revised our construction sector estimates for 2008
onwards. Primarily, this comes as a result of
new methodology being
introduced in our forecasting method, a change that has been introduced
across
the spectrum of BMI’s Infrastructure Reports in an effort to
increase the relevance and reliability of our
data.
For Brazil, we
have revised down our forecasts and predict that real construction sector
growth will slow
to 2.5% in 2009, from an estimated 6.5% in 2008 and just
over 8.5% in 2007. After 2009, we predict that
the pace of construction
sector growth will pick up again in Brazil, on the back of a brightening of
global
economic conditions, led by massive fiscal pump-priming in the
US.
Risks to our forecasts are largely to the downside, particularly in
2010. The external threat generated by
the global economic downturn is the
main risk factor. In the worst-case scenario, a prolonged recession in
the
US and elsewhere would severely hamper Brazil' s export growth, GDP growth, and
(crucially)
government revenues over an extended period, with attendant
implications not only for commercial
construction in the country, but also
public investment and infrastructure tenders.
In November 2008,
representatives from Rio de Janeiro' s Galeão port said that, in spite of
the global
financial crisis, the planned US$1.1bn port expansion would
continue. Included in the project would be
the modernization and expansion
of the Porto Novo wharf facilities and a dredging that would increase
channel depth from 14m to 18m. Other planned upgrades include the construction
of a dry dock by
Wtorre Engenharia, the creation of a shipyard by the Quip
consortium, and the modernization of the
Copesul/Braskem and Granel
Química terminal
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