BMI View: Peru presents a growing range of opportunities for investment in the country's infrastructure sector. A shortfall in the current housing stock combined with improving income rates and access to various financing options is stimulating growth in residential construction. In turn, this growth is being supported by government efforts to address utilities infrastructure deficits - including expanding access to water and developing the national electricity generation and distribution network. Peru has also embarked on a number of ambitious transport projects, including new metro lines and airport expansions. While growth will be slow in 2016, Peru's economic outlook is brightening and the country is increasingly welcome of private investment, indicating strong medium to long term growth potential.
Forecast and Industry Developments
A number of projects, including the Lima metro expansion and Southern Peruvian Gas Pipeline have been subject to delays and construction growth has slowed over the first half of the year, from 2.1% in Q1 to 0.9% in Q2 (according to figures from the Central Bank). As a result we have made a slight downwards revision to our 2016 forecasts for the Peruvian construction sector and now expect to see more subdued growth of 1.7% (against a previous forecast of 2.6%).
Although some projects have been delayed, the transport sector is expected to remain the outperformer in 2016, growing by 4.7% - primarily due to major railway projects. This sector in particular is benefiting from the growing use of public-private-partnerships.
In contrast, the energy and utilities sector is expected to record the fourth consecutive year of contraction in 2016, largely due to the delays besetting the flagship Southern Peruvian Gas Pipeline project. A return to growth is expected in 2017.
|e/f = BMI estimate/forecast. Source: BCRP, BMI|
|Construction industry value, PENbn||38.54||40.98||44.36||47.81||50.90||53.94||56.90|
|Construction Industry Value, Real Growth, % y-o-y||-5.87||2.62||4.66||4.47||3.42||2.98||2.48|
|Construction Industry Value, % of GDP||6.3||6.2||6.2||6.2||6.2||6.1||5.9|
Peru's score on the Infrastructure RRI has declined slightly this quarter to 48.6 out of 100, reflecting slowing growth amidst delays to key projects.
Peru's Rewards score, which is 46.4 this quarter, remains one of the higher scores in the Latin America region, reflecting healthy medium term growth prospects.
The country has a strong score of 53.7 for Risks, indicating that while the operating environment is challenging, regulation, access to finance and transparency are improving.
|Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
The Peru 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 Peru Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Peruvian infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for Peru to test other views - a key input for successful budgetary and planning in the Peruvian infrastructure market.
- Target business opportunities and risks in the Peruvian infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Peru.
- 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.