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Brazil Infrastructure Report Q4 2009Published by: Business Monitor International Published: Sep. 16, 2009 - 91 Pages Table of Contents
AbstractDespite the government’s continued commitment to supporting the development of Brazil’sinfrastructure, the country will be hit hard by the impact of the credit crunch on private investors.However, investment is showing signs of returning gradually, and as such we have marginally increasedour forecasts for Brazil’s construction industry, although we still maintain that the industry will contract.In BMI’s Q409 Brazil Infrastructure Report we are forecasting a 5.15% contraction in constructionindustry value for 2009, to reach BRL132.3bn (US$64.02bn).Over the past quarter a number of projects have been announced and therefore we believe that by nextyear activity will pick up significantly. As such we are forecasting the industry to grow by 8.61% in 2010.The transport sector continues to be a key driving force behind industry activity, most notably the roadsector. A number of states in Brazil have been awarded loans by the Inter American Development Bankfor upgrading roads. In addition, a number of tenders are due to be launched for road projects by the endof the year; both of these elements will feed into activity next year and the year after. The major contractthat was awarded in the sector was a concession for the Aryton Senna/Carvalho Pinto motorway to theEcorodovias Group, which is jointly owned by Italian construction group Impreglio and Brazil's CRAlmeida Group. The utilities sector also saw activity as Brazil continues to build up electricity generating capacity to meetforecasts for rising demand. Both MPX Energia’s Pecém I thermal power plant and GDF Suez’s Jirauhydropower plant secured financing over the past quarter, showing that project financing is opening up. The largest project currently in the pipeline, the 11.2GW Belo Monte hydropower project, hit a setbackwhen it was announced that costs had more than doubled to US$11bn, the project is due to be tendered inOctober 2009. The ongoing activity does present risks to the upside for our forecasts. However, it all depends onwhether the government funds from the growth acceleration plan (PAC) are mobilised successfully, andtherefore the promise of the plan alone is not enough to counter reduced private sector investment. Fallingprivate sector investment due to difficulties in financing projects and risk aversion in the markets is one ofthe key factors behind our forecast for a contraction. In addition, the declining macroeconomic climate(real GDP contraction of 0.6% forecast in 2009), due to falling demand for Brazil’s key revenue source(exports), will impact on demand for construction. The issue of accessing credit has been a key catalyst inour revision. BMI's country risk analysts continue to forecast a sharp decline in real capital investmentgrowth in 2009 (-14.8% y-o-y), linked directly to the lack of financing which indicates reducedinfrastructure investment and therefore upholds our forecast for a contraction in Brazil’s constructionindustry. Get Full Details About This Report >> |
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