Limited growth for Brazil

By Joe Malone21 October 2015

The Brazilian construction market will see limited growth over the next five years, according to Timetric’s Construction Intelligence Centre (CIC).

It says the deteriorating economy, a weak property market, and a lack of investor confidence will be the reason for its shortfall.

The industry’s output value fell from US$ 226.3 billion in 2013, to US$ 214.9 billion in 2014. This was due to a budget deficit and the ‘Operation Lava Jato’ (Operation Carwash), an investigation into corruption at the state oil company, Petrobras. This resulted in low confidence and a delay in projects, affecting the demand for activity in 2014, the company said.

However, the 2016 Olympic Games in Rio de Janeiro are predicted to increase activity, resulting in a slight growth to US$ 215.1 billion in 2015. Output value is then expected to fall after the Games, to an estimated US$ 204.1 billion in 2019.

Residential construction was the largest market during the review period at 31% of the total. Timetric said the government’s efforts to offset the country’s housing deficit, lower interest rates and an expanding middle-class population supported the market, which posted a nominal compound annual growth rate (CAGR) of 14.9%. Over the forecast period, the market is expected to remain the largest, with a share of 29.6% in 2019.

Infrastructure was the second-largest market at 28.5%, and it expects to stay strong throughout the Games, due to its need for stadiums, transport and hotels.

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