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Explosive Growth Sparks Brazil’s Booming Infrastructure Boom
Explosive Growth Sparks Brazil’s Booming Infrastructure Boom
C.J. Schexnayder / ENR

There is considerable evidence to back his boast. After decades of boom and bust, Brazil has witnessed phenomenal growth since 2000. The primary force is surging commodity prices. The currency is strong, employment is robust, and, after a five-year period of listless or negative growth, the construction sector is explosive.

According to a recently released survey by the Brazilian Institute of Geography and Statistics, after suffering more than a decade of decline the construction sector grew more than 7% in 2006, the most recent year with available figures. The study found construction firms performed $70 billion in activities and services and accounted for 1.5 million jobs.

The biggest single factor for the surge is infrastructure work, which jumped more than 20%. Even so, the World Bank reports Brazil’s devotes about 1% of the country’s GDP to infrastructure in-vestment. The nation should spend 3.2% “to keep the structures and services in operation,” the study notes.

Starting his second term in January 2007, Lula unveiled a sweeping $51-billion investment package to spur economic growth. The Program to Accelerate Development (PAC) uses infrastructure and energy projects that rely heavily on hydroelectric projects. Lula hopes his will boost foreign investment, which doubled to $34.6 billion last year.

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  • Still, large hurdles remain. A labyrinth of regulatory controls dampens major projects, and potential impacts of big projects, mostly in the energy sector, continue to feed environmental opposition. At least 120 infrastructure projects across the country have been held up because they lack necessary permits and licenses.

    There are perils for construction firms as well. Increased demand for services and rising costs for equipment and materials are a dangerous combination for unwary firms, says Marcelo Odebrecht, president of Construtora Norberto Odebrecht SA. “Some companies will perform better than others because they will try and be more selective, but [those] that just go for growth will face huge, huge difficulties.”

    ast month, Brazil shed its status as a developing nation. On June 16, financial rating services elevated the country’s long-term risk level to investment grade. President Luiz Inácio Lula da Silva, speaking at the country’s BOVESPA stock ex­change, said, “Brazil is no longer a colony. It is a developed nation.”