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Brazil Infrastructure Report Q2 2016

Brazil Infrastructure Report Q2 2016

BMI View: Brazil's construction sector remains in a state of flux, with the recession expected to persist in 2016 as tenders are delayed, companies face a high cost of capital, the public sector remains in gridlock. The recession will ease as the government filters funding into the sector through state banks, however, a longer term recovery is unlikely without necessary reforms.

Latest Updates And Structural Trends

We are broadly maintaining our outlook for Brazil's construction sector after 2015 real growth came in line with our estimate, at -7.6%. We maintain our expectation for the recession to persist in 2016, albeit easing to -2.7%, with a deeper recession expected in the broader economy and ongoing implications from the Lava Jato corruption scandal directly impacting the construction sector and creating significant political uncertainty.

We continue to expect growth to return in 2017, although we have marginally downgraded our forecast to 2.2%. Risks are heavily to the downside from growing momentum behind efforts to remove President Dilma Rousseff from office either through invalidating the election results or impeachment - although our core view is currently for Rousseff to serve out the remainder of her term.

With President Rousseff having lost considerable political capital and the Brazilian government as a whole in turmoil, we see little indication that necessary reforms to restructure the market will take place. For example, efforts to remove a reliance on government financing for infrastructure have been wound back as the recession takes hold and the government seeks to support the sector. Without major structural changes, we expect Brazil's construction industry to continue to underperform its significant potential, and thus maintain our muted long-term forecast, averaging 1.8% between 2017 and 2025.


BMI Industry View
Table: Brazil Construction Industry Forecast
Table: Infrastructure Risk/Reward Index (Brazil)
SWOT
Industry Forecast
Construction And Infrastructure Forecast Scenario
Latest Updates
Table: Brazil 10-Year Construction Industry Forecast
Structural Trends
Transport Infrastructure - Outlook And Overview
Latest Updates
Table: Brazil 10-Year Transport Infrastructure Industry Forecast
Structural Trends
Table: 2015 Transport Concessions Plan - Allocations
Table: Transport Projects
Energy And Utilities Infrastructure - Outlook And Overview
Latest Updates
Table: Brazil 10-Year Energy & Utilities Industry Forecast
Structural Trends
Table: Energy & Utilities Projects
Residential/Non-Residential Building - Outlook And Overview
Latest Updates
Table: Brazil 10 Year Residential & Non-Residential Industry Forecast
Structural Trends
Table: Construction And Social Infrastructure Key Projects
Industry Risk Reward Ratings
Brazil - Infrastructure Risk/Reward Index
Risk/Reward Index
Rewards
Risks
Latin America Industry Risk/Reward Index
Table: Latin America Infrastructure Risk/Reward Index
Market Overview
Competitive Landscape
Table: Key Company Financials
Company Profile
Odebrecht
Table: Odebrecht Financial Data
Methodology
Industry Forecast Methodology
Sector-Specific Methodology
Risk/Reward Index Methodology
Sector-Specific Methodology
Table: Infrastructure Risk/Reward Index Indicators
Table: Weighting Of Indicators

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