Infrastructure in Brazil requires 4.3% of GDP per year during 10 years

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In the wake of the economic recession, investments in infrastructure plummeted. In 2017, they totaled R$ 110.4 billion, 34% less than the peak of R$ 166.5 billion in 2014.

In 2018, the scenario did not change. It is estimated that the public and private sectors jointly invested R$ 113.7 billion. Private investments in infrastructure fell by 27.4% from 2014 and 2017. Public investments decreased by 43.5% in the period.

Brazil invested, on average, 1.7% of its GDP in infrastructure over the last three years – and this amount has never been over 2.5% over the last 15 years. However, the country needs to invest 4.3% of GDP for ten consecutive years just to eliminate development bottlenecks. These figures are from Abdib.

Over the past 15 years, the private sector invested more in infrastructure than the public sector – a rare case among developed or emerging countries.

In 2017, private companies accounted for 66.3% of the investments in infrastructure.

The transportation sector includes highways, railroads, waterways, airports, ports and urban mobility. The sector requires 2.26% in annual investments (% GDP) during a period of ten years in order to increase productivity and avoid growth bottlenecks. The abrupt decline since 2014 was due to the fiscal crisis and unbalanced investments in private concessions. A great potential for the private sector still exists. But public (state) investments are still essential in a country where only 12% of the road network is paved. Urban subways and trains rely on public investments, worldwide.

Notwithstanding the disarrangement in prices and regulation, the electricity sector in Brazil is momentarily assured in terms of supply. The sector requires 0.84% in annual investments (% GDP), which has been reasonably accomplished in recent years. The private sector has been the largest investor in energy generation, transmission and distribution in Brazil, and its share should increase due to the recent privatizations and further concessions are still expected. The electricity sector has led the investments in all infrastructure segments over the last 15 years, except for 2008 when transportation investments were higher.

Technically, the telecom sector is not 100% private because the federal government recreated Telebras in 2010. But federal investments were so small that they only appear in the third decimal place. Overall, investments in telecom areas – fixed, wireless and broadband – have been satisfactorily carried out by private concessionaires. The current challenge is to expand broadband speed and breadth and increase demands from households, businesses and the public sector. The annual investment requirement is 0.76% of GDP during ten consecutive years.

Basic sanitation is sector that most lacks in resources. The annual average investment rarely exceeded 0.20% of GDP over the last 15 years – and the annual required investment is 0.45% of GDP during ten consecutive years in order to provide universal access to water and sewage services. These amounts do not include investments for depollution and water security, which will greatly increase the amount of resources needed. Basic sanitation is also the most closed sector for private capital even after the passing of several federal laws in the last ten years to stimulate private players.