Market Trends of Brazil Infrastructure Sector
This section covers the major market trends shaping the Brazil Infrastructure Sector Market according to our research experts:
Increasing Investments in Infrastructure Sector
Brazil's infrastructure is booming with increasing foreign investors' confidence in the investment climate. This growth is constantly driven by the country's transportation infrastructure sector, which is the foundation of growth for the country. The transportation sector witnessed continuous growth in 2022. In addition, according to the United Nations Conference on Trade and Development, in 2021, more than 53% of financial proposals were received by Brazil's infrastructure sector. In 2022, the investment momentum continued with an increased pipeline of projects, such as 26 airport auctions, nine highway auctions, four railway auctions, and 22 port auctions, in addition to the Paraná Highway, which may generate more than USD 8.6 billion in investment.
The Brazilian government introduced some reforms in recent years, which helped decrease the cost of doing business in Brazil by more than USD 77 billion. These reforms include the Sanitation Law, which ended restrictions on private sector investments for sanitary projects, and the New Highway Concession Design, which strengthened the risk-sharing and incentives framework for highway development projects. In addition, in 2021, these successful reforms paved the way for long-term benefits for international investors. The government continuously recognizes the importance of creating an environment to attract foreign investors.
Meanwhile, Brazil's energy sector is gaining traction among foreign investors, as the country is the world's ninth-largest power consumer and producer. In Brazil, more than 84% of the energy is produced from renewables, which is one of the cleanest electrical matrices in the world. As per industry experts, more than 98% of new investments are expected in the renewable power sector by 2050. However, in 2021, as per the Brazilian Association of Infrastructure and Base Industries, investments in infrastructure reached more than USD 28 billion. Thus, the growing investments may drive the infrastructure sector in the country.
Social Infrastructure is Witnessing Significant Growth
The education and healthcare sectors are experiencing significant growth after the pandemic. In 2022, the education sector received increasing funding and investments. A global school group, Inspired Education, announced the acquisition of Escola Eleva Global Schools in Brazil and a new investment of EUR 1 billion (USD 1.06 billion) to support the continued growth and expansion. Meanwhile, in March 2022, Vasta Platform Limited planned to invest in Educbank through its subsidiary Somos Sistemas de Ensino SA. Educbank is the first financial ecosystem intended to expand access to quality education in Brazil.
In May 2022, the World Bank approved more than USD 250 million for the Recovering Learning Losses From COVID-19 Pandemic in Brazil project. This project supports the educational system in the country by implementing innovative programs and systems to strengthen education management in primary and lower secondary schools in the North and Northeast region of the country.
However, the healthcare sector also experienced lucrative growth driven by the pandemic. In July 2021, the Japan International Cooperation Agency (JICA) signed a Private Sector Investment Finance (PSIF) Loan Agreement with Itaú Unibanco SA, a Brazilian private financial institution, to provide financing of USD 150 million. This funding was utilized to modernize and enhance Brazil's healthcare sector by improving private hospitals' capacity and the supply capacity of medical equipment and pharmaceutical companies. Thus, the increased funding in the healthcare and education sectors is driving the overall social infrastructure sector. According to the National Health Confederation, in 2022, more than 7,191 hospitals were operating in Brazil, the highest number reported during the period.
