The rise in input prices is what worries civil construction businessmen, according to the CBIC (Brazilian Chamber of the Construction Industry). The problem was mentioned by 46.7% of the sector’s entrepreneurs in the survey “Economic Performance of the Civil Construction Industry and Prospects”, released this Monday (25.Apr.2022).
It is the highest percentage recorded since the 1st quarter of 2015. According to the survey, the high cost of inputs has been identified as the main problem in the sector for 7 consecutive quarters.
Based on the INCC (National Construction Cost Index), the CBIC reported that the inflation recorded for materials and equipment used by the sector was 51.21% from January 2020 to March 2022.
Among the significant variations highlighted by the CBIC, are electrical conductors (91.9%), PVC pipes and connections (91.8%), carbon steel rods and wires (81.5%) and PVC conduit ( 70.8%).
GDP weight
The increase in spending ended up influencing the sector’s GDP (Gross Domestic Product), generating growth of 9.7% in 2021. According to Ieda Vasconcelos, an economist at CBIC, the variation in civil construction GDP surprised last year, but this was owes to the comparison bases — since, in 2020, there was a 6.7% decrease in this item.
“The projection for 2022 is for growth of 2.5%, but this is also due to the basis of comparison with the 9.7% of 2021. The problem is that, if we continue to grow at 2.5% per year, it will only be in 2033 that we will reach the level of activity observed in 2014. [Mantendo este índice,] the sector will still work for 11 years below its peak of activities”explained the economist.
Lower profitability
Ieda pointed out that, even with this growth, the sector lost participation in the national GDP, falling to 2.6% in 2021. “It’s the lowest level in history”, he said. In the peak years, between 2010 and 2014, the indicator was always above 6.2%. It reached 6.5% in 2012, according to CBIC data.
president of the entity, Jose Carlos Martins explained this growth in the sector, which was accompanied by the loss of participation in the GDP. “What grew was the added value, because it considered the increase in inputs. This ended up taking away the profitability of those who carry out the works. Therefore, the result did not remain with the sector, but with the suppliers”.
high interest
Another factor that worries construction entrepreneurs, and which has gained more strength, is the high interest rates – cited as one of the main problems in the sector by 26.7% of entrepreneurs in the first quarter of 2022.
“This is the highest level since the second quarter of 2017 (27.9%). In relation to the first three months of 2021, which was 11.6%, the high [dos juros] was 15.1 percentage points”said the president of the CBIC.
purchasing power
The high interest rate also hampers the purchasing power of families, which worries the CBIC. Therefore, the entity defends social programs aimed at simpler housing. “The Casa Verde e Amarela Program is what gives access to the first property of a family”said Martins.
“We need to rebuild the purchasing power of families. In addition, states that received less support from this program were the ones with the worst rates. Therefore, we need to keep in mind the aspect that fixing regional imbalances is very important”he said, mentioning Pará, Maranhão, Tocantins, Amapá, Roraima, Rondônia, Acre, Piauí, Paraíba, Amazonas, Alagoas, Sergipe and Rio Grande do Norte.
Another concern highlighted by the businessmen consulted by the CBIC is the “lack or the high cost of the skilled worker”, cited by 18.2% of the survey participants, in addition to insufficient domestic demand, mentioned by 16.5% of entrepreneurs.
With information from Brazil Agency.
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