Brazil - Transport and Logistics: Investments to drive growth (Strategy, Performance and Risk Analysis)
Brazil is a strong federal republic in South and Central America. However, due to inflation and the prevalence of political corruption, the economy contracted. GDP recorded a CAGR of -3.0%, falling from US$2.5tn in 2012 to US$2.1tn in 2017. Measures to curb corruption, encourage large-scale private sector investment, and friendly relations for neighboring countries are expected to drive economic growth. GDP is anticipated to post a CAGR of 2.1%, from US$2.2 trillion in 2018 to US$2.4 trillion in 2022.
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Government investments to drive road transport GVA
Brazil’s road transport GVA registered a CAGR of -2.9%, falling from US$41.4bn in 2012 to US$35.8bn in 2017, but is anticipated to post a CAGR of 2.1%, from US$37.8bn in 2018 to US$41.1bn in 2022. The increase can be primarily attributed to the government’s Logistics Investment Program. In June 2015, it announced the delegation of 7,000km of highways and roadways to the private sector for an investment of US$22bn. The program include Highways - BR-116/RJ/SP, Highways - BR-153/GO/TO, Highways - BR-116/RJ and Highways - BR-040/MG/RJ.
Rail freight to drive rail transport GVA growth
In Brazil, rail transport GVA registered a CAGR of -0.04%, falling from US$3,959.6m in 2012 to US$3,951.0m in 2017, but is anticipated to post a CAGR of 4.0%, from US$4.3bn in 2018 to US$5.0bn in 2022. The increase can primarily be attributed to a demand for rail freight.
New contracts to drive warehousing and storage GVA
Warehousing and storage GVA in Brazil registered a CAGR of -2.8%, falling from US$20.3bn in 2012 to US$17.7bn in 2017, but is anticipated to post a CAGR of 2.1%, from US$18.7bn in 2018 to US$20.3bn in 2022 due to the increasing volume of contracts. In April 2017, DHL Supply Chain secured a contract to provide in-house logistics services for Jaguar Land Rover’s new manufacturing facility in Brazil, while in February 2017, Ceva Logistics expanded its business partnership with Mercedes-Benz to provide in-plant logistics services at a plant in Minas Gerais.