Construction renews optimism and forecasts a 4% increase in 2021, the biggest advance in 8 years – Prime Time Zone

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Expectations are driven by the increase in real estate financing, lower interest rates and an improvement in the economy; purchase of inputs and tax burden are obstacles

Brazil Archive/AgencyThe sector could grow up to 6% in 2021 without the obstacles due to the increase in prices and the lack of inputs

A Brazilian Chamber of Construction Industry (CBIC) renewed optimism and again forecast a 4% increase in the Gross Domestic Product (GDP) the sector in 2021. The expectation is the same as observed at the beginning of the year. In March, however, the projection was reduced to 2.5% due to the resurgence of new coronavirus pandemic and the increase in material costs. If confirmed, it will be the biggest advance since 2013, when the sector grew 4.5%. The new projection is part of the Economic Performance of the Construction Industry survey for the 2nd quarter of 2021, presented this Monday, 26. The rise in expectations is reinforced by the increase in real estate financing, interest rates at reduced levels and the improvement of the economic environment. Despite the upward revision, the entity claims that the result could be even better if production was not being limited by the lack of raw material and the increase in the cost of inputs, especially steel. According to the president of CBIC, José Carlos Martins, the sector would be able to grow 6% this year. “The construction is like a Ferrari with a handbrake on. It could be a historic year in terms of growth and hiring workers. But some factors, such as the increase in inputs, created fear among entrepreneurs and it turned out that we are not doing what we could be doing.”

Activity reached the level of 48.6 points in the second quarter, the best performance for the period since 2012. In June, the index reached 51 points, the highest result since September 2020 and the most expressive for the month since 2011. Last month’s performance was also the best observed in the first half of the year and is above the historical average of the index. Despite the upward trajectory, problems observed since last year, when the health crisis brought an imbalance between input production and demand, persist on the radar. The CBIB survey showed that the lack or high cost of raw material remains the main problem faced by businessmen from construction for the fourth consecutive quarter, reaching 55.5% of respondents. The high tax burden appears next, totaling 31.5% of respondents. The sector’s expectation remains above the historical average, but less intense than previously registered. The entity’s economist, Ieda Vasconcelos, points out that, despite the upward movement, the sector still accumulates a drop of 33.34% since 2014. “Even with the 4% growth in 2021, the retraction in this period will continue to exceed 30% , which is quite expressive. Construction will need to continue to grow a few more years at this intensity for full recovery to take place.”

The good moment of civil construction was also evidenced by the records of the Real Estate Market Survey (PMI), released by the Housing Union of São Paulo (Secovi-SP). The market ended the first quarter with 27,114 units launched, while sales closed with 29,935 properties sold. The two records surpass the records achieved in the same period of 2019. The numbers become more significant if we consider the historical average of records from the first semesters of 2004 to 2020, a period in which the average of launches was 12 thousand units and the sales reached to approximately 13 thousand units. Despite the good results, the increase in unemployment and the gradual increase in the Selic rate challenge the sector. “Add to these factors the readjustment of construction inputs, which raise the cost matrix of the projects, but which have not yet been completely transferred to the final price of the properties, which will be inevitable if the bottlenecks are not resolved”, he says. the president of Secovi-SP, Basilio Jafet.