In today’s issue: Is Brazil’s construction sector ready for a comeback?
Is Brazil’s construction sector ready for a comeback?
After four years of stagnation, Brazil’s construction sector could finally be set for a comeback. At least according to the National Confederation of Industry (CNI). Three factors are crucial for any potential return to strength: (1) controlled inflation, which makes costs more predictable and increases people’s purchasing power; (2) low interest rates, which stimulate access to credit; and (3) higher price ceilings for subsidized housing loans, which should boost residential projects.
But these factors alone are not enough to promote a robust growth rate in a sector that has lost 21% of its size between 2012 and 2017. The sector lobbies for a more comprehensive infrastructure program. And, as the government remains cash-strapped, concessions and privatizations could be the force behind such projects—in line with what the new administration defends.
Brazil’s construction sector had its heyday in 2010—when it grew by 13%. During that period, the country enjoyed a combination of access to long-term credit, heavy public investment, and a booming economy. In 2012, however, families already started suffering an elevated level of debt—which reached 46% of their income by 2015...