Peru Infrastructure Report Q2 2016
BMI View: We expect the Peruvian construction industry to recover in 2016, following a severe contractionin 2016 as a number of key transport and energy projects move forward. Over the longer term, a robustproject pipeline, high infrastructure demand and strong political support for infrastructure developmentwill maintain construction growth.
We expect a rebound in Peru's construction industry in 2016. The advancement of high value projects inthe transport and energy and utilities sectors, coupled with low base effects, will see the total constructionvalue 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 themarket.
Overall, government sponsored infrastructure projects will now be the major driver of growth, as capitalexpenditure into the mining sector continues to decline. Public support will remain strong under theremaining months of the Humala administration, and will remain so under the government of oppositioncandidate Fujimori, who we expect to win the April 2016 elections.
A large infrastructure deficit, robust project pipeline and strong government support will sustain growththroughout our forecast period, where we see growth averaging 3.0% from 2016 to 2025.
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