BMI View: Government budget cuts and the ongoing implications of Operation Lava Jato have seen us downgrade growth for Brazil's construction sector and we now anticipate a recession in 2015 and 2016. The BRL169bn logistics investment programme (PIL) will provide limited respite to the recession, as we expect take-up to be limited in the current climate. Over the longer term the scandal could force a much-needed restructuring of the Brazilian construction sector.
The Lava Jato scandal continues to drag on, halting substantial construction activity, as such we now expect the recession to be deeper in 2015 (-7.6%) and persist into 2016 (-2.6%).
There have been limited indications of necessary reforms to restructure the market, prompting us to maintain our muted long-term forecast, averaging 1.7% between 2017-2024.
We maintain our expectation that the BRL198.4bn logistics investment programme (PIL) will not be fully realised due to lack of domestic capacity and unattractive terms for international players.
Brazil 5-Year Construction Industry Forecast
| || 2014 || 2015f || 2016f || 2017f || 2018f || 2019f |
| f = BMI forecast. Source: IBGE, BMI |
| Construction industry value, BRLbn || 306.68 || 310.41 || 320.94 || 345.52 || 372.13 || 397.23 |
| Construction Industry Value, Real Growth, % y-o-y || -2.50 || -7.58 || -2.61 || 2.16 || 2.40 || 1.49 |
| Construction Industry Value, % of GDP || 5.6 || 5.3 || 5.2 || 5.2 || 5.2 || 5.1 |
Brazil's Infrastructure Risk/Reward Index score continues to fall q-o-q and overall scores 46.35 out of 100, compared to 48.6 last quarter.
Brazil's score for Industry Rewards has again fallen, as we are now factoring in a recession in the construction industry in 2015 and 2016.
We already hold a low score for Industry Risks in Brazil and this has been further reinforced by the Lava Jato corruption scandal, which has implicated a large number of contractors in the country.
The Brazil Infrastructure Report features BMI Research'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.
- Benchmark BMI's independent infrastructure industry forecasts for Brazil to test other views - a key input for successful budgetary and planning in the Brazilian infrastructure market.
- Target business opportunities and risks in the Brazilian infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Brazil.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis covering infrastructure and construction, regulatory changes, major investments and projects and significant national and multinational company developments. These are broken down into construction (social, commercial and residential), transport (roads, railways, ports, airports, etc), and energy & utilities (powerplants, pipelines and so on).
Industry SWOT Analysis
Analysis of the major strengths, weaknesses, opportunities and threats within the infrastructure and construction sectors and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (up to 2012) and forecasts to end-2024 for all key industry indicators, supported by explicit assumptions, plus analysis of key developments in the market and risks to the main forecasts. Indicators include:
Construction: Industry value (USDbn); contribution to GDP (%); total capital investment (USDbn); real growth (%).
Construction industry real growth forecasts (%) and industry value (USDbn) forecasts for industry sectors are split into Residential and Non-residential and Infrastructure sectors. Where the data is available for particular countries the infrastructure is further broken down into indicators for the transport subsectors of roads, railways, airports and ports and the energy and utilities sub-sectors of power plants and transmission grids, oil & gas pipelines and water infrastructure. This dataset is unique to the market.
The reports also include analysis of latest projects across the infrastructure sectors (transport, utilities, commercial construction).
BMI’s Infrastructure Risk Reward Index
BMI’s Risk Reward Index provides investors (construction companies, suppliers and partners) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points. These provide indices of highest to lowest appeal to investors, with each position explained.
An assessment of the competitive landscape and key challenges to entering the market. Details of the largest companies active in the sector across the sub-segments of the industry, including the key financial figures from some of the largest players in the sector.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Infrastructure reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.