BMI View: We expect the Peruvian construction industry to recover in 2016, following a severe contraction in 2016 as a number of key transport and e nergy projects move forward. Over the longer term , a robust project pipeline, high infrastructure demand and strong political support for infrastructure development will maintain construction growth.
We expect a rebound in Peru's construction industry in 2016. The advancement of high value projects in the transport and energy and utilities sectors, coupled with low base effects, will see the total construction value expand 4.8% in real terms.
The steep contraction in 2015, -6.5% y-o-y, was caused by prolonged delays on a number of key projects. We continue to highlight the risks of project delays, especially with the relatively new use of PPPs in the market.
Overall, government sponsored infrastructure projects will now be the major driver of growth, as capital expenditure into the mining sector continues to decline. Public support will remain strong under the remaining months of the Humala administration, and will remain so under the government of opposition candidate Fujimori, who we expect to win the April 2016 elections.
A large infrastructure deficit, robust project pipeline and strong government support will sustain growth throughout our forecast period, where we see growth averaging 3.0% from 2016 to 2025.
|e/f = BMI estimate/forecast. Source: BCRP, BMI|
|Construction industry value, PENbn||38.14||41.17||43.90||46.74||49.53||52.24||55.10|
|Construction Industry Value, Real Growth, % y-o-y||-6.45||4.84||3.65||3.46||2.92||2.37||2.48|
|Construction Industry Value, % of GDP||6.3||6.3||6.3||6.2||6.1||6.0||5.8|
Peru's Risk/Reward Index score has risen slightly q-o-q with an overall score of 51.0, compared to 49.0, in line with our more positive outlook for 2016.
Peru's Industry Rewards score of 49.7, which benefits from a large size and growth prospects, places the country in fifth place in Latin America, just behind Chile.
Peru's score for Industry Risks remains low at 45 out of 100, with a lack of institutional capacity and permitting 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.