May 22, 2014

• A paper produced by the Bank’s Economic Research Division indicates a slight raise compared to October and an annual expansion rate of 5.1%

A study concluded by the Brazilian Development Bank (BNDES) shows that the investments in the Brazilian economy should total R$ 4.07 trillion in the 2014-2017 period. The amount is expected to surpass the R$ 3.98 trillion assessed for the same period in the previous survey, disclosed in October 2013.

The result is part of an update of the study Investment Perspectives for the 2014-2017 period, elaborated by the BNDES’ Economic Research Division. This map includes company projects and strategic plans, not only those supported by the Bank.

The most significant changes were to oil and gas, with a R$ 30 billion increase in investments related to previous numbers, and a total forecast of R$ 488 billion between 2014 and 2017; electric power, amounting to R$ 16 billion (R$ 192 billion in total investments forecast); as well as pulp and paper, with an increase of R$ 7 billion (total amount of R$ 26 billion).

Investments in urban mobility were incorporated into the newly-revised version. Along with sanitation projects already being accompanied by the Bank, they are part of the social infrastructure sector.

By including the urban mobility segment, it is possible to envisage the perspectives of an area with importance to the country’s social and economic development. Investment perspectives for the sector total R$ 89 billion, up 83% in comparison to the R$ 49 billion effectively carried out in the previous four-year period (2009/2012).

Real growth – Real growth of 28% is expected in investments for 2014-2017 period (an annual rate of 5.1%) in relation to the 2009-2012 period, when R$ 3.17 trillion was invested.

Of the total R$ 4.07 trillion planned for 2014-2017, industry accounts for R$ 1.15 trillion in investment perspectives, which will accumulate a 31% increase (up 5.5% on the year), especially due to the oil and gas sector.

The aeronautics sector, projecting investments of R$ 14 billion in the period, is also highlighted in terms of growth, with projects in the commercial and defense areas.

Infrastructure accounts for R$ 575 billion, with a 35% increase, driven primarily by two sectors related to logistics: ports and railways. Among the planned investments are those made through concessions and public-private partnerships, within the Logistics Investment Program (PIL).

Electric power – Investment perspectives for the Brazilian electric sector in 2014-17 is R$ 191.7 billion, mostly in hydroelectric generation, with R$ 54.5 billion. Wind parks are the second highlight with estimated investments of R$ 43 billion. Electric power transmission comes in third, with investment estimates of R$ 37.6 billion.

Railways – In the railways sector, investment perspectives are for R$ 57 billion in 2014-2017, highlighting: network expansion, foreseen in the PIL; Valec’s direct investments; projects to modernize and increase the capacity of the permanent railway track; and expanding the rolling stock fleet. The PIL foresees investments in 12 sections, a part in new projects (greenfield), and a part in modernizing the existing network (brownfield).

Urban mobility – Investment perspectives in urban mobility for 2014-2017 are at R$ 54 billion, with an average annual growth rate of 30%. Of this total, some 58% is earmarked for subway projects, 16% for monorail projects, 13% for Rapid Bus Transit (BRTs) projects, 7% for train projects and 6% for Light Rail Vehicles (VLTs).

These investments will have the support of a return to investment capacity of states, due partly to the recent rounds of discontingency carried out by the federal government and to applying federal funds in urban mobility projects through PAC – Mobility – Large and Medium-Sized Cities. Another important element is the expanding private investments in the sector through PPPs.

The study is available here.