Study: Investment in Brazil’s infrastructure must double to make a leap in competitiveness | Economie

studying An estimated R$339 billion annual investment that will be pursued until 2038 to increase quality and local availability, placing Brazilian infrastructure among the top 20 in the world in the World Economic Forum (WEF) Global Competitive Ranking.

The report, prepared by consulting firm Pezco Economics, estimates that investment in the sector fell from R$122.4 billion to R$115.8 billion in 2020 due to the coronavirus pandemic, which corresponds to a proportional to 1.55% of GDP (Gross Domestic Product). ). Brazil. However, the forecast for 2021 is that the value will rise to R$137 billion, or 1.69% of GDP, to recover from the 2019 level, but still be at a very low level and below the peak of the early 2000s.

To reach the average annual value of R$339 billion by 2038, the growth rate of infrastructure investment must be “at least 5.5% annually,” according to the study. Maintaining the average of the past 25 years (1.6%), it would take Brazil 64 years to reach the desired level and the figure in 2038 would still be R$163 billion, or half of what is necessary.

The report states that “Given historical growth averages, it is not clear whether Brazil will reach the proposed target for 2038, and given the latter situation, the scenario of expansion and maintaining high growth rates also raises doubts.”

Founded in 2017, the Infra 2038 movement serves as a think tank for discussing and promoting franchises and public-private partnerships. The group advocates increasing investments in infrastructure as a way to obtain productivity gains, reduce production and logistical costs, and thus increase international competitiveness and create jobs.

In 2020, Brazil climbed to 70th place in the ranking, according to the points report تقرير

The projections take into account Brazil’s position in the “infrastructure” pillar of the World Economic Forum’s Global Competitiveness Ranking.

Due to the pandemic, the World Economic Forum has not released the results for 2020. In the latest edition, which was released in 2019, Brazil was ranked 71st overall and Ranked 78th in the Infrastructure category. The lower the number, the higher the ranking position.

Singapore topped the ranking, followed by the Netherlands, Hong Kong, Switzerland, Japan, Korea, Spain, Germany and France. The infrastructure pillar assesses aspects such as quality, access, comprehensiveness, density, efficiency, and reliability in the areas of transportation, electricity, sanitation, and communications.

Infra 2038 states that the volume of investments decreased in Brazil less than in other countries during the pandemic and estimates that Brazilian infrastructure rose 3 places in the ranking last year, having managed to regain the 70th position in 2021. See the chart below:

“The improvement in 2021 was very marginal, we are still in a pandemic, but committed investments and progress in investments point to a very important recovery in 2022,” says Frederico Torola, an economist at Pizzo, coordinator of the report, highlighting the accelerating pace. Agenda of concessions and public-private partnerships in infrastructure, especially in railways and sanitation, which has seen large auctions even during the pandemic.

Comparison with other countries

In international comparison, the size of Brazilian investment, in terms of percentage of GDP, exceeds what is observed in other economies in the region such as Mexico and Colombia, but is much smaller than what is observed in emerging Asian countries such as India and China, which amount to invest more than 6% of gross domestic product.

“The investment required for Brazil in infrastructure is much greater than in other countries because the distances are greater, and the uninhabited parts of the territory are much greater,” says Torola. “Given the size of the country, Brazil will need to invest twice as much as it currently invests to get into these top 20 countries, and should invest more than 4% of GDP.”

According to the study, the main challenges lie in the field of logistics of transporting heavy goods, whose shortcomings and low productivity continue to affect the international competitiveness of Brazilian exports.

“To get an idea of ​​the current situation, Brazil currently has a rail index of only 3.57 kilometers of available rail lines per thousand square kilometers of land, while Japan, the country with the highest density in the world, has an index of 46.57,” highlights the report.

Among the key developments, Infra 2038 points to improvements in some legal frameworks such as sanitation, an increase in the volume of feasibility studies for concession projects and progress on bills aimed at making investments in the sector more attractive to foreign capital.

“Lack more planning, multi-year investment plans, hiring qualified people to help develop project engineering and good demand studies so you don’t have to make a lot of modifications in the future. Projects that were poorly executed or made with the monetary touch are the root of the problems in the additions Principal cost of business,” assesses Marlon Airey, an infrastructure attorney and member of the Infra 2038 Executive Committee.

The number of auctions in 2021 already exceeds the total in 2020

In 2021, 37 auctions were conducted under the Partnership Investment Program (PPI), focusing on Cedae privatization, Grant West and East Integration Railway (Fiol) , Oh 22 airport auction it’s the Electricity transmission line auction This is Wednesday (30). Last year, only 29 projects were auctioned.

The 37 auctions held in the first half have already secured contracting investments of nearly R$50 billion, according to data from the Ministry of Economy, and PPI predicts that this amount may exceed R$260 billion given the occurrence of the planned auctions. end of the year.

Since 2019, more than 100 federal and subnational projects already removed from the paper by PPI add to an investment forecast of R$536 billion over the term of the concessions, according to the government. The outcome of the recent auctions is expected to further reflect the volume of annual investments in infrastructure from 2022.

PPI’s portfolio currently includes 235 concession and privatization projects under construction, including railways, highways, ports and national parks, as well as auctions for oil and gas, power, mining, sewage and public lighting, among others.

Among the biggest auctions scheduled for this year are the BR-163/230 (scheduled for July 8), 3 New Energy Auctions (July and September), the Amaba Water and Sewerage System Concession (September 2), and the 17th Cycle. Oil and gas blocks (October 7) and surplus blocks from transfer rights (December 17).

Public investment versus private investment

Center Serious financial crisis in the public sector and budgetary difficulties, The team of the Minister of Economy, Paulo Guedes, advocated greater openness of the economy and Increasing private sector participation as a means to restore the level of investments in the country.

“If we want to rely on public investment, we go back to PAC[ProgrammadeAcceleraçãodoCrescimentodosgovernosLulaeDilma)eeparamentoinheirlacomainãofirma”saysTorola[برنامجتسريعالنمو،لإداريتيلولاوديلما)وكيفتمذلك:لايستثمرأيشيء،ويخصصالكثيرمنالأموال،ولكنلايخرجالاستثمار”،كمايقولتورولا[ProgramadeAceleraçãodoCrescimentodosgovernosLulaeDilma)eparacomosefazia:nãoinvestenadaalocamuitodinheiromasoinvestimentomesmonãosai”afirmaTurolla

However, other entities such as the Institute for Industrial Development Studies (Iedi) advocate some level of public investment resumption as a way to more quickly overcome bottlenecks in Brazilian infrastructure and speed up economic recovery.

“Although private investment is undoubtedly indispensable, insufficient public investment presents itself as a serious limiting factor to the progress of the country’s infrastructure,” Iedi highlighted in a study released last week, assessing that even if the private sector managed to Success, doubling the annual investment volume, there will still be a gap to meet the immediate needs of the country.

“The role of the state as an investor is important in many countries, not least because of the existence of a stockpile of assets that has no economic attractiveness to the private sector,” the institute adds.

A recent survey conducted by economist Manuel Perez, coordinator of the Ibre/FGV Fiscal Policy Monitor, showed that the overall investment rate in the economy, as measured by gross fixed capital formation (GFCF), It has fallen by nearly half over the past decadeFrom 4.56% of GDP in 2010 to 2.58% in 2020.