Summary

The Brazilian construction industry suffered a downturn for a fifth year in a row in 2018, where it contracted by 2.5% in real terms, preceded by annual declines of 7.5% in 2017, 10% in 2016 and 9% in 2015. This decline can be attributed to economic slowdown and a fall in oil prices, which worsened the business environment in the country. Factors such as austerity measures adopted by the government to reduce the budget deficit and corruption allegations against politicians had an adverse impact on the construction industry.

The industry is expected to remain sluggish in 2019, before recovering to an annual average rate of 2.3% in real terms during the latter part of the forecast period (2020-2023), driven by the government’s efforts to improve the country’s infrastructure and increasing investment in energy and manufacturing plants.

The industry’s output value in real terms is expected to post a compound annual growth rate (CAGR) of 1.75% over the forecast period, compared to -7.30% during the review period (2014-2018). However, a weakening economy and rising global protectionism continue to present key downside risks to the outlook.

Key Highlights

- GlobalData expects the residential construction market to retain its leading position over the forecast period, driven by the government’s plan to build affordable houses for low- and middle-income people. In September 2019, the state government of São Paulo launched the Nossa Casa housing program. Under this, the state government plans to invest BRL1 billion (US$250 million) to build 60,000 affordable houses through the PPP by 2022.
- Industrial construction market’s output over the forecast-period will be supported by the government’s aim to increase auto manufacturing capacity in the country. Under the Route 2030 Program, the government plans to remove custom duty on imported components used by auto manufacturing companies. Moreover, in order to attract foreign manufacturing companies, the government is focusing on the development of Export Processing Zones (EPZ) across the country. Under the EPZ, the government provides administrative support, tax benefits and foreign exchange law support to foreign manufacturing companies.
- GlobalData expects the infrastructure construction market to post a CAGR of 2.53% in real terms over the forecast period, driven by the government’s plans to develop the country’s infrastructure. In January 2019, the Brazilian government announced it wants to push forward its plans to build new roads and railways, including the construction of the the BR-319 highway, the extension of the BR-163 highway and the Ferrogrâo (Grainrail) and FIOL (Railway for the Integration of the Center-West).
- Institutional construction market’s output over the forecast-period is expected to be supported by the government’s focus on developing the country’s tourism sector. Under the National Tourism Plan 2018-2022, the government aims to attract 12 million tourists to the country by 2022. To meet this target, in May 2019 the government launched the Investe Turismo Program to develop the country’s tourist destinations and provide incentives for new business; for this, the government allocated BRL200 million (US$51.5 million) as an initial amount for investment.
- The total construction project pipeline in Brazil - as tracked by GlobalData, and including all mega projects with a value above US$25 million - stands at BRL2.2 trillion (US$597.8 billion). The pipeline, which includes all projects from pre-planning to execution, is skewed towards early-stage projects, with 57.4% of the pipeline value being in projects in the pre-planning and planning stages as of November 2019.

GlobalData’s Construction in Brazil - Key Trends and Opportunities to 2023 report provides detailed market analysis, information and insights into the Brazilian construction industry, including -
- The Brazilian construction industry's growth prospects by market, project type and construction activity
- Critical insight into the impact of industry trends and issues, as well as an analysis of key risks and opportunities in the Brazilian construction industry
- Analysis of the mega-project pipeline, focusing on development stages and participants, in addition to listings of major projects in the pipeline.

Scope

This report provides a comprehensive analysis of the construction industry in Brazil. It provides -
- Historical (2014-2018) and forecast (2019-2023) valuations of the construction industry in Brazil, featuring details of key growth drivers.
- Segmentation by sector (commercial, industrial, infrastructure, energy and utilities, institutional and residential) and by sub-sector
- Analysis of the mega-project pipeline, including breakdowns by development stage across all sectors, and projected spending on projects in the existing pipeline.
- Listings of major projects, in addition to details of leading contractors and consultants

Reasons to buy

- Identify and evaluate market opportunities using GlobalData's standardized valuation and forecasting methodologies.
- Assess market growth potential at a micro-level with over 600 time-series data forecasts.
- Understand the latest industry and market trends.
- Formulate and validate strategy using GlobalData's critical and actionable insight.
- Assess business risks, including cost, regulatory and competitive pressures.
- Evaluate competitive risk and success factors.