Although the construction sector registered a significant growth of 5.5% in May, according to the BCRP, the Peruvian Chamber of Construction (Capeco) predicts that in June there would have been a drop of 3.3% due to low cement consumption (-5.9%), with the sector experiencing its second contraction during the first half of 2024.
Likewise, the slowdown in the progress of public works – going from 33.1% in May to 4.4% in June – would pave the way for a result like the one projected for the sixth month. However, Capeco estimates that construction will end this first semester with a rise of 4% and between 3.2% and 4% at the end of the year, after a 2023 in which it fell by 7.86%.
Why insufficient bounce?
During the first half of 2023, construction fell 8.97%. In the words of Guido Valdivia, director of Capeco, a “rare situation.”
“I think that in 25 years we have never fallen as we did last year, almost 9% in the first half and around -8% for the whole year,” he told The Republic.
In that sense, This is mainly due to the recovery of mining investment – which reached US$1.735 billion until May – that the expected growth of the construction sector of 4% could be achieved for the first half of this year.
He even points out that mining investment could increase by 6.4% thanks to two expansion projects: Toromocho and Antamina. Similarly, non-social housing, together with works such as Metro Line 2 and Jorge Chávez Airport –both of a large scale– would strengthen the estimates.
Although official projections for the end of the year are more conservative than those of private consultants – the BCRP estimate being 3.2% – Construction would not recover from the sharp contraction in 2023.
“The gaps in the sector prevent it from growing. It is not reasonable that with so much budget for investments and works we have such meager growth. 4% is fine, but it is insufficient,” noted Valdivia.
THE DATA
Effect. Despite the importance of public works to “save” construction with its 12% growth, in Capeco’s opinion it will be limited by the paralysis of projects, corruption and poor prioritization.
Source: Larepublica
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