Abstract
Brazil’s construction industry has been hit by the global downturn.
However, the government, through its
ongoing growth acceleration
programme, is working to support infrastructure investments. As a result,
in
BMI’s Q209 Brazil Infrastructure Report we believe that there
will be growth in the value of the
construction industry in 2009, of 2.49%
year-on-year (y-o-y), reaching a value of BRL139bn.
So far in 2009 there
has been activity in the various construction subsectors, much of which is
supported
by the Programa de Aceleração do Crescimento (PAC),
the government’s growth acceleration plan . In
the transport sector,
the government announced a US$2bn upgrade for the Port of Santos. A number
of
road and rail concessions were launched, and in January, the RodoBahia
consortium, including Spain’s
Isolux Corsan, was awarded a US$868mn
25-year highway concession in Bahia state, including
upgrading 550km of
highways.
The power sector has also seen significant developments. The
Angra III nuclear power plant (NPP),
which has been in the pipeline for
over two decades, was given environmental approval in March 2009.
The NPP,
which is being developed by Eletronuclear, will boost Brazil’s nuclear
power capacity by
1,400MW when it is completed in 2014. The Belo Monte
11.2GW, US$4.1bn hydropower plant is also
moving along with
Eletrobrás submitting the environmental impact study in March 2009. Work
is also
due to start on the Jirau hydropower plant, with the Brazilian
Development Bank awarding GDF Suez
and its partners a US$3.1bn loan for
the project.
In the construction sector, the government approved US$152bn
for the construction of low income
housing over the next 15 years.
Commercial and tourism construction is also set to get a boost from
preparations for the 2014 World Cup, which ABDIB estimates will cost US$43bn
in preparation costs
However, Brazil’s construction industry in
general is expected to take a hit over 2009. This is due to
falling
private sector investment due to difficulties in financing projects and risk
aversion in the markets
in general. In addition, the declining
macroeconomic climate (real GDP contraction of 0.6% forecast in
2009), due
to falling demand for Brazil’s key revenue source (exports), will impact
demand for
construction. Indeed, in February 2009 it was announced that at
least BRL10bn (US$4.5bn) of investment
into private infrastructure
projects had been delayed or cancelled since September 2008.
Currently the
sector is being propped up by the PAC, the government’s growth
acceleration programme
which – including a boost allocated in
February 2009 – envisages BRL642bn invested in infrastructure
projects between 2007 and 2010.
BMI notes that the PAC is one of the key
elements maintaining Brazil' s construction industry real growth
at a
positive level, especially in light of the value of cancelled and delayed
projects from the private
sector. The government has repeatedly noted that
investments under the programme are safe, and has
stated that 83% of the
projects currently being developed under the PAC were running on schedule.
In
addition, the government announced that public investment in
infrastructure increased by 50% y-o-y in
2008 compared to 2007, reaching
US$4.92bn, as reported by Dow Jones Newswires.
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