Brazil: still on the expansion trail

Published 26 August 2014

Brazil’s cement producers continue to expand their capacity as they prepare for anticipated market growth. The first five months of 2014 have seen demand slowly climb 2.8 per cent to 28.8Mt, a trend that is hopefully set to continue. Infrastructure projects, fuelled by mega sporting events, and investments to alleviate the country’s considerable housing shortage, bode well for future cement demand. In the short-term, however, pressure to meet construction deadlines on major projects and the huge US$1.4bn cartel fines somewhat cloud the clear-blue sky.

Brazil’s cement producers anticipate steady market expansion as the country alleviates

its housing shortage and builds much-needed infrastructure

While the Brazilian economy has picked up since 2011-12, growth has perhaps not been as swift as the country’s government may have wanted. The country’s GDP growth was 2.3 per cent in 2013, according to the IMF and the organisation forecasts just 1.8 and 2.7 per cent growth in 2014 and 2015, respectively.
Inflation is another concern as the government is aiming to hold it at 4.5 per cent, but the likelihood is that a higher rate will be registered by the end of the year. In a country that pays good taxes and can invest in its future, this economic performance causes concern among economic commentators. Armino Fraga, the former central bank president who now advises the opposition party, recently said that Brazil is heading for “deterioration” with low growth and high inflation. While consumption remains resilient, supply-side issues exist and the country is in need of significant near-term investment.

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