New Market Report Now Available: Brazil Infrastructure Report Q2 2010

March 15, 2010 - PRLog -- This quarter BMI has introduced a new data series for infrastructure and its subsectors (transport and energy & utilities). This is an effort to address a significant deficiency in the availability of globally comparable, infrastructure-specific indicators and forecasts across a wide range of countries. BMI's new infrastructure data series enables users to quantify trends and growth patterns in the infrastructure sectors of the 35 main emerging and developed markets out of the 62 countries in BMI's infrastructure service. Despite the government's continued commitment to supporting the development of Brazil's infrastructure, the country will be hit hard by the impact of the credit crunch on private investors. As such, in BMI's Q110 Brazil Infrastructure Report we are maintaining our forecast for Brazil's construction industry value to contract by 5.15% in real terms in 2009, to reach a value of BRL138bn (US$67bn). Brazil's infrastructure industry will be hit equally hard and therefore we are forecasting the infrastructure industry value to contract by the same level, to reach BRL75bn (US$37bn). According to BMI's new data breakdown for Brazil, transport infrastructure accounts for the majority of total infrastructure industry value, and we are forecasting this to continue. Within transport infrastructure, roads and bridges infrastructure industry value accounts for the vast majority of the total, and activity on the ground appears to reflect that this will continue. A number of road projects have progressed, with the Rodobahia consortium signing a contract for upgrading and running for 25 years 700km of roads in Bahia state. At the same time, the IADB has approved loans of almost US$900mn to the Concessionária do Rodoanel Oeste consortium for upgrading and maintaining the Rodoanel Oeste beltway around São Paulo. Rail, which in 2009 is anticipated to account for 5.6% of total transport infrastructure, is also anticipated to maintain just a small share. The high-speed rail project has been further delayed this quarter, with the tender being pushed back to October in September. However, with that month having passed and BMI not having seen an update, further delays are likely. One bit of progress has been made in that the Brazilian authorities now accept that completing it in time for the 2014 World Cup is all but impossible. As well as the 2014 World Cup, Brazil was awarded hosting rights for another high-profile sporting event this quarter, with Rio de Janeiro winning the 2016 Olympics hosting rights. This is expected to facilitate US$14bn in investment, with the majority anticipated to be in infrastructure, such as urban transport, which is currently lacking in the city. Another concern for the games is electricity reliability. In November a major power cut hit 18 of Brazil's 26 states, leaving parts of the country without power for up to four hours. The power cut, caused by a storm, has highlighted the shortcomings of Brazil's electricity transmission system, and is likely to see increased investment in response to international pressure. Investment in the utilities sector has been growing over recent years; however, the sector accounts for only the minority portion of infrastructure industry value (31.55% in 2009). This is likely to increase in light of the spotlight on the transmission grid and the forecast expansion in demand that will need to be met in order to capitalise on economic growth opportunities.

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