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Construction in Argentina - Key Trends and Opportunities to 2017

Argentina construction market: 18% CAGR growth witnessed between 2008-12


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2014-03-31 03:14:02 - Construction in Argentina - Key Trends and Opportunities to 2017 - a new market research report on companiesandmarkets.com

The Argentine construction industry increased in value at a CAGR of 17.98% during the review period. This growth was supported by significant public investments in infrastructural, commercial and industrial construction. Construction industry growth is expected to remain positive over the forecast period, as a result of the government´s focus on infrastructure and residential construction. The Argentine construction industry´s output is expected to record a CAGR of 12.80% over the forecast period.

According to the National Institute of Statistics and Censuses (INDEC), seasonally-adjusted construction activities in the country increased by only 0.7% in the first quarter of 2013, compared with the same period in 2012. The industry will remain weak in 2013, owing to the deceleration of the broader economy, deterioration in

 

 

the business environment, and restrictions on the purchase of US dollars – the currency in which real estate transactions have traditionally been conducted. However, the outlook for construction in Argentina over the forecast period remains positive, although the expansion of output is set to moderate gradually.

After reaching a peak of 22.4% in 2002, unemployment rate in Argentina reached a ten year low of 7.1% in 2011, before inching up to 7.2% in 2012 as high economic growth in the last ten years boded well for job creation. With the economy expected to grow at a slower pace, unemployment rate is also likely to rise gradually during 2013–2014.

Argentina´s total budget deficit widened to 2.6% of GDP in 2012, from 1.7% in 2011, as total government expenditure grew at a faster pace of 30.2% in 2012, compared with 26.6% revenue growth during the year. The primary budget balance (excluding interest payments) also registered a deficit of 0.2% of the GDP in 2012, reversing from a surplus of 0.3%, recorded in 2011, and is expected to be in deficit mode during 2013, owing to the subdued economic outlook.

In a bid to reduce capital flight and tax evasion, and support the home currency, the Argentine government imposed new restrictions on the purchase of US dollars in 2011. Accordingly, Argentines who want to purchase US dollars have to declare the source of money and disclose their national and tax numbers. However, in May 2013, to boost energy and real estate sectors and claw back dollars, the government introduced the Tax Amnesty Law, under which Argentines have opportunities to convert undeclared dollars and assets into interest-earning bonds, which offer a 4% interest coupon and mature in 2016. These bonds provide an alternative source of finance for energy and infrastructure projects, and aim to attract more private investment to finance the majority of construction projects.

Argentina´s rich cultural and geographical resources make it an attractive international tourist destination. Sports tourism is also an important contributor to the tourism industry in Argentina, and Brazil´s hosting of the FIFA World Cup in 2014 and the Olympic Games in 2016 are expected to have a knock-on benefit for Argentine tourism, driving demand for leisure and hospitality buildings over the forecast period.

The residential construction market will be supported by government-led affordable housing projects. In 2012, the government announced the National Home Loans Programme Scheme to provide affordable housing loans of up to US$77,000 each to 400,000 people.

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