BMI View: Peru has a significant infrastructure deficit spanning across the transport, energy and residential sectors which will ensure that demand for new projects remains high over the coming years, indicating potential investment opportunities for a broad range of construction contractors. Headwinds to growth for the construction sector include a lack of capacity from domestic firms, concerns surrounding the transparency and timely implementation of public tenders and lack of access to adequate financing, which all contributed to a construction value contraction in 2015. While we expect to see a small recovery in 2016, challenges to the infrastructure market remain significant, and, based on the current project pipeline, growth will remain subdued.
Official construction industry values for 2015 have come in as forecast, with an overall decline in value of 5.87% over the year. We have made a downwards revision to our forecasts for growth in 2016, to 2.62%, based on delays to key projects, while the outlook for the remainder of the forecast period is more positive, with overall construction value growth averaging 3.11% between 2017 and 2025.
The transport sector will prove the outperformer in Peru's construction market in 2016, growing by 7.04%. A number of projects are progressing, including the Red Vial 5 highway project, between Huacho and Pativilca, which is due to be completed in early 2017 (almost a year later than originally planned).
The election of Pedro Pablo Kuczynski in June 2016 is a positive indicator for Peru's infrastructure sector, particularly the much delayed USD7.3bn Southern Peruvian Gas Pipeline project, which now appears to be regaining traction after embattled Brazilian construction firm Odebrecht exited the project. The new President has come out in strong support of the pipeline, and will have rapid access to the required funds - including a USD7.9bn 'rainy day fund' and USD2.5bn in contingency loans from the World Bank.
|f = BMI forecast. Source: BCRP|
|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 maintains an overall score of 51.0 on the Infrastructure RRI this quarter, reflecting the solid growth prospects of this small market.
Peru's Rewards score, which is 49.7 this quarter, benefits from a large size and growth prospects, and puts the country among the top five in Latin America.
Peru's score for Industry Risks remains low at 45.0 out of 100, with a lack of institutional capacity and permit issues continually delaying projects.
|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.