Dallas, Texas (PRWEB) August 05, 2014
The Argentine construction industry increased in value, at a nominal compound annual growth rate (CAGR) of 21.55% during the review period (2009–2013). However, in real terms, the CAGR was only 3.54%, as a result of high inflation in the Argentine economy. This growth was supported by public investments in residential, infrastructural and commercial construction. Increased government investment, the adoption of a build-operate-transfer (BOT) model and private sector participation through public-private partnerships (PPPs) helped to increase infrastructure construction activity. Industry growth is expected to continue over the forecast period (2014–2018) as a result of the government’s focus on infrastructure and residential construction, improved investor sentiment, and an anticipated recovery in the global economy. The industry is anticipated to post a forecast-period CAGR of 22.53%. However, with high inflation in the country, the industry’s output growth rate in real terms is expected to be lower over the forecast period.
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Since late 2013, construction activity in Argentina has been fairly weak, with the industry contracting by 2.1% and 9.9% in real terms in the first quarter of 2014 compared with the first and the fourth quarters of 2013 respectively. This followed an annual average growth of 1.8% in real terms in 2013. According to the country’s national statistical office, the Instituto Nacional de Estadística y Censos (INDEC), the construction industry’s output at constant prices fell from ARS37.8 billion (US$6.9 billion) in the fourth quarter of 2013 to ARS34.1 billion (US$5.3 billion) in the first quarter of 2014. With high inflation, a deteriorating business environment and depreciating domestic currency against the US dollar, the real growth rate of the construction industry’s output is expected to remain weak over the forecast period.
Under the Norte Grande III Infrastructure Program, the Inter-American Development Bank (IDB) granted an ARS1.6 billion (US$300.0 million) loan to Argentina in 2013 to enhance, improve and rehabilitate road corridors in the Norte Grande region. The tenure of the loan is 25 years, with a grace period of 5.5 years. The aim of the project is to improve the transport network, cut travel time, increase average annual traffic, and reduce transport costs and road accidents in Norte Grande. This is expected to drive growth in infrastructure construction over the forecast period.
According to the Central Intelligence Agency (CIA), 15.7% of Argentina’s population is aged 15–24 years, which has the potential to drive growth in the residential construction market. The growing young population resulted in a housing deficit of 2.5 million units in 2012. Despite a large number of housing units being built in the country since 2003, the supply is still not sufficient to meet the rising demand. Consequently, the government and private housing agencies are promoting various affordable housing projects in the country. These factors will support residential construction activity over the forecast period.
With the aim of promoting greater provincial and regional economic competitiveness, the Argentine government announced a total investment of ARS699.3 million (US$128.0 million) in 2013 under the Regional Highway Development Program, to improve, refurbish and expand road networks in the Jujuy and Santiago del Estero provinces. The project is co-financed by the Development Bank of Latin America, with a loan of ARS491.7 million (US$90 million). A contribution of ARS207.6 million (US$38.0 million) will be made by the Argentine government. The project involves the renovation and construction of 102.0km of roads in Jujuy and Santiago del Estero, which is expected to complete by 2015.
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