Brazilian construction market set to benefit from hosting the FIFA World Cup and Olympic Games

The Brazilian construction market recorded a compound annual growth rate (CAGR) of 13.16% over the past four years, reaching a value of BRL398.5 billion (US$204.5 billion) in 2012.

The country's high tax burden, shortage of skilled labour, poor infrastructure and strong currency made it uncompetitive and reliant on domestic market growth.

The main catalysts for the regions infrastructure development are the country's hosting of the 2014 FIFA World Cup and the 2016 Olympic Games. The Brazilian construction industry is expected to continue to attract a high level of investments for various planned construction projects to develop the country's transport, energy and housing.

The FIFA World Cup in 2014 and the Olympics in 2016 are expected to attract a large number of visitors and create business opportunities. The commercial construction market is projected to record a CAGR 8.47% over the coming years, to reach a value of BRL43.2 billion (US$22.2 billion) in 2017.

A depressed economic environment in Europe, coupled with China's slowing growth rate, has led to a decline in the demand for Brazil's exports, and consequently a decline in production. While there are signs of the sector stabilizing, a recovery is not anticipated before 2014.

Construction activity in Brazil's industrial construction market will therefore remain relatively sluggish. Indeed, industrial construction is projected to be the slowest-growing construction market over the forecast period, recording a CAGR of 7.10%.

The presence of global companies in the Brazilian construction industry has led to increased levels of technical expertise in the industry, which is adding to competition among construction companies.

Beyond 2014, a modest slowdown is expected, with growth remaining around 5-6%, a more sustainable level for an industry the size of Brazil's (BRL205bn in 2011). Projects for the 2016 Olympics will have only a marginal impact on growth, and therefore much more will depend on a continuation of government infrastructure spending plans, which will be heavily impacted by the outcome of the 2014 presidential election.

For more information on the Brazilian construction market, see the latest research: Brazilian Construction Market

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