Investments in Public Works Declined 30% in Brazil with Lula

Public works investments dropped nearly 30% between 2002 and 2003. Large cuts (13.7% in nominal terms and 26.1% in real terms, discounting inflation) were made by the federal, state, and municipal governments in the area of infrastructure.

These cuts chiefly affected highway construction, ports, airports, urbanization of public plazas, and sanitation. Private sector investments in construction also declined, but to a lesser degree (17%).


These data are drawn from the Annual Study of the Construction Industry, 2003, released today by the Brazilian Institute of Geography and Statistics (IBGE).


The study shows that the total value of constructions in 2003 amounted to US$ 29.8 billion (73.8 billion reais), US$ 1.22 billion (3 billion reais) less than in 2002, corresponding to a 17.8% decrease in real terms.


Moreover, government spending on construction represented 12.3% of the Gross Domestic Product (GDP) in 2003, compared with 16.1% in 2002.


For the IBGE’s coordinator of industry, Sí­lvio Salles, the results of the study are consistent with the performance of the economy, which registered a decline in the rate of investments in 2003 and a near-zero GDP growth.


“The 17,8% decrease in construction investments in 2003 was significant, chiefly affecting infrastructure projects, whose main clients are government agencies.


“The justification is that 2003 was a year of transition, the first year of a new Administration, in which the focus was on controlling inflation, and there was a reduction in government expenditures.”


According to the study, private sector investments are concentrated mostly in the area of commercial construction, such as shopping malls and business offices.


The study identified 119 thousand construction firms active in 2003, employing 1.4 million people, who earned an average of US$ 425 per month.


Agência Brasil

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