Recovery paves the way for strong infrastructure investment
Argentina’s economy is recovering with most sectors enjoying growth. GDP, which grew 2.8 percent in 2017, is forecast to rise 3 percent in 2018. Inflation is high, 22.7 percent in 2017, but down from 40 percent in 2016 and it is projected to hit 15.6 percent in 2018. Rising household purchasing power and consumer spending should strengthen economic growth.
The government plans to launch 61 projects in 2018 across a range of infrastructure sub-sectors including roads, electricity transmission and railroads. There is strong support for renewable power generation, presenting opportunities for private investment. While huge government-led infrastructure projects, combined with legislative changes, boost the economy as private investment slowly ramps up.
With its latest PPP programmes, the government is seeking USD30bn of new investment in 60 projects spread across transport, energy, water and sanitation and health sectors. One USD9.5bn water project involves 38 infrastructure schemes covering drinking water, sanitation, dam and irrigation works.
|Cost escalation 2017–18:||31.7%|
|Cost escalation 2018–19:||35.0%|
|Location factor (USD):||47.9|
A strengthening economy, government-promoted infrastructure projects and a foreign-investment-friendly policy, passed last year, should open up big opportunities for construction. However, high inflation still hits construction costs, which require a buffer to accommodate rising materials prices.
Meanwhile, there is growing momentum behind projects exploiting natural resources and renewable energy, with a focus on Argentina’s lithium resources.
This content is part of the International construction market survey 2018