Forecasting the South American construction sector is a difficult activity, bearing in mind that there are more than 10 divergent countries that all have different construction practices & economic goals. The construction market forecast for each of these countries ebbs & flows on the policies of each Governments economic policies or social needs. Much of the future construction growth in South America will be enhanced by the improving economies & increased government spending on public facilities & infrastructure projects. The last three years have been challenging economically for most South American countries. However there are a few encouraging indications.
The South American Construction / Infrastructure / Commercial Construction markets will experience moderate growth for the remainder of 2019, commercial & office related type construction is active throughout South America. Shopping mall(s), apartments, warehouses, water supply / disposal, office developments, housing & light manufacturing facilities have & will continue to be built in major & mid-sized cities in Argentina, Chile, Central America (Panama, El Salvador, Guatemala & Nicaragua) & Colombia – look for this trend to continue in 2020 & beyond.
Brazil’s construction industry is experiencing modest gains as we move into the 4th Q of 2019. Signs are pointing to a decent growth year for industrial and commercial construction in Brazil in 2020. President Jair Bolsonaro is Brazil’s newly elected President. The construction industry is expected to remain restrained & trending towards a small advance for the balance of 2019. The Brazilian Government is planning to invest more than $60 billion in new infrastructure / transportation projects in the next two years. Brazil, one of the (BRICS) Brazil, Russia, India, & China – has experienced a terrible decade economically. Construction activity in Brazil has been lackluster over the last three to four years, following significant political turmoil & a continuing business downturn. Brazil is currently experiencing a small uptick in its construction sector. Unemployment in 2019 in the Brazilian construction sector is 12% to 17% which is historically very high for Brazil, look for this rate to improve in 2020. Overall industry unemployment is slightly less, ranging between 11.5% & 11.9% still historically high.
The change in leadership mentioned above will not put a quick fix of Brazil’s economy & construction sector. Brazil’s GDP is forecast to grow in the 0.9% to 1.3% range for the balance of 2019. Inflation in Brazil is projected to be in the 3.3% to 3.6% for the remainder of 2019, a big improvement from a year ago. It would appear that Brazil is set for better days in 2020 & beyond.
The Colombian construction sector is experiencing growth going into 2020, a number of large Infrastructure and Industrial projects are in the pipeline.
Argentina is experiencing a currency drop that indicates the country is heading into a recession & possible political turmoil going into 2020. Economic activity has fallen in the last six months, high interest rates, & a drop in consumer confidence – these issues & rising inflation have put a damper on new construction projects.
The United Nations estimate that 4 million citizens have left Venezuelans as the country’s economic situation worsens. The Venezuela economic / construction state of affairs will become more & more tenuous as we move further into 2020, the question is how long can this continue without an uprising?
South America’s construction sectors will continue to experience restrained demand for EPC services. Argentina & Venezuela will continue to find 2019 to be a challenging year; they are both in recession. The other major countries, i.e. Brazil, Bolivia, Colombia, Chile, Ecuador, Paraguay, Peru & the Central American nations will all see positive / restrained GDP growth for the balance of 2019, ranging between 1.5% to 2.2%, good but not that great. The recent expansion of the Panama Canal will be a big plus for Central American economies & their construction sectors.