BMI View : A robust project pipeline across energy, water, transport, residential and social infrastructure supports our positive outlook for Chile's construction sector, in 201 7 and throughout the 10 -year forecast period to 2025. The government is highly supportive of construction sector growth and has created an open investment environment via the extensive use of public-private partnerships, particularly in the transport sector, and healthy access to project financing. While some downside risk is presented by falling revenue from key exports, private consumption and fixed capital investment are expected to remain in positive territory.
Latest Updates And Structural Trends
In light of weaker-than-expected growth over Q116-Q316, notably in the construction sector, we have made a slight downward revision to our short-term forecasts for Chile's infrastructure sector and now expect to see real value growth of 0.91% over the course of the year, following 2.25% in 2015. Based on the strength of the current project pipeline, as well as stated energy targets and investment plans, we expect to see further growth over the forecast period, averaging 2.5% annually between 2017 and 2025.
The government is committed to improving housing infrastructure, with 25,000 new residential units due to be built across the country. In the non-residential sector, a large number of hospitals and smaller health facilities are planned or under construction under the plan to invest USD4bn in the country's healthcare system - although we note projects have been subject to extensive delays.
Roads continue to take the bulk of investment in the transport infrastructure segment. Public-private partnerships and concessions are used extensively in the transport sector and the already expansive project pipeline will receive a further boost from the April 2016 launch of a USD1.4bn investment plan to improve roads in 12 regions of the country over the next five years.
The strong turnout for the USD800mn tender for the second phase of the Americo Vespucio Oriente highway project in Santiago de Chile highlights the strong competition in the concession market and bodes well for progress of the infrastructure pipeline, which includes a list of public-private partnership (PPP) projects.
Rising household and industrial consumption will ensure investment continues into Chile's power infrastructure. As well as new thermal power plants under development, we are also seeing extensive investment into renewables, particularly wind and solar power. The outlook is less positive for hydropower, where major projects continue to face public opposition.
Further downside risk to our current forecasts is presented by a potential economic decline in Chile (in addition to the small decline we have already taken into account this quarter). The country relies heavily on commodities exports, particularly copper, and falling prices will impact on the economy and threaten availability of revenue for public spending projects, which could cause delays or cancellations in the project pipeline.
|f = BMI forecast. Source: BCC|
|Construction industry value, CLPbn||11,864.83||12,424.06||13,196.23||13,844.65||14,525.90||15,316.58||16,154.23||17,040.34||17,977.66||18,969.06||20,017.59|
|Construction Industry Value, Real Growth, % y-o-y||2.25||0.91||3.02||2.21||1.92||2.38||2.73||2.42||2.54||2.70||2.46|
|Construction Industry Value, % of GDP||7.6||7.5||7.7||7.6||7.5||7.4||7.3||7.2||7.2||7.2||7.4|
Chile ranks highest in our Latin America regional Risk/Reward Index, just ahead of Colombia and Mexico. Market-friendly policies and strong institutions have been the hallmark of the Chilean government, setting the benchmark for political stability in the region.
The risks of investing in Chile's infrastructure sector are minor compared with neighbouring countries. The country therefore scores almost double the regional average.
Chile's public-private partnership (PPP) and concession model is one of the most advanced in the region. This is reflected in the country's strong score for Industry Risks in our index.
|Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
The Chile 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 Chile Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Chilean infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for Chile to test other views - a key input for successful budgetary and planning in the Chilean infrastructure market.
- Target business opportunities and risks in the Chilean infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Chile.
- 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.