BMI View: Peru's construction industry will benefit from a broad range of government-backed projects aimed at addressing deficits in housing and energy and transport infrastructure over the coming years.
However, the ouster of key ministers on corruption allegations, political infighting, and major delays have plagued the infrastructure industry in recent quarters and will see the industry contract in 2017, and presents significant risks to our broadly positive outlook for the industry moving forward.
Forecast and Industry Developments
We downgraded our construction industry value growth for 2017 to -1.2% from 0.2% due to major project delays, political infighting and a weak Q117 reading. In this environment, the strongest growth is expected in transport infrastructure (5.2%) as Lima metro expansion drives sector growth.
The withdrawal of Brazil's Odebrecht from the Southern Gas Pipeline project in the wake of corruption charges will result in significant delays. Odebrecht was revealed to have paid USD12mn in bribes in Peru and forced to withdraw from the USD7bn project.