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Brazil's ports were in need of BRL43bn (US$23.4bn) worth of investment to upgrade capacity and meet significant long term growth forecast for the sector, it was stated in August. Brazil's ports are underdeveloped and, although trade has declined significantly over the previous year, over the long term, trade is expected to expand rapidly. The figure was announced in a report by Brazil's Institute for Applied Economic Studies (IPEA), as quoted by Dow Jones, which noted that 265 projects are needed in order to bring the country's port sector up to standard, including upgrading existing facilities and greenfield port projects. New ports, however, are not the main focus of investment needs, with the IPEA noting that just 9% of the recommended amount, or BRL4bn, should go to new projects. The remainder should be invested in upgrading infrastructure at existing ports. Investing in Brazil's port sector is an ongoing priority in the country, which is export-dependent for much of its economic growth.
Since our last report, we have slightly raised our Brazilian growth forecast. We continue to estimate GDP contraction of 0.6% in 2009, but are now expecting a stronger recovery in 2010, with growth of 3.6% (was 2.0%). We have also raised the number for 2011 to 3.9% (was 2.9%). These figures constitute our latest update and may supersede those in the preceding section. We now expect annual GDP growth to average 3.9% in the 2010-2014 period, up from 3.5% in the preceding five years. We have adjusted our maritime freight forecasts to link them to changes in overall trade volumes (rather than GDP) and to reflect slower export performance and the downturn in shipping rates. We maintain an earlier reduction of our airfreight intensity estimates, given the downturn in demand in H208 and H109. The pipeline throughput forecast was earlier raised marginally towards the end of the forecast period, taking into account increased gas demand and the expected growth in ethanol exports. As a result of these changes, our freight carried forecast is for annual average growth of 6.7% in 2010-2014, measured in million tonnes per km.
According to our latest estimates, transport and communications GDP will have fallen by 0.2% in 2009, less steeply than overall GDP, which we estimate will have contracted by 0.6%. For the 2010-2014 forecast period, we expect the transport and communications sector to outpace the economy as a whole. It will achieve average annual growth of 4.2%, versus 3.9% for overall GDP. The total value of transport and communications GDP will rise to US$144.8bn in nominal terms by 2013, representing 5.4% of Brazil's GDP. The transport and communications sector employed 4.99mn people, or 5.0% of the labour force, in 2009. We see these figures rising to 6.18mn and 5.5% by 2014.
For the rail sector, we see freight carried, measured in million tonnes per km, growing by an annual average of 5.9% during the five-year forecast period, down from 6.5% in 2005-2009. Despite the economic slowdown, rail should enjoy a favourable combination of demand and expanding capacity, as new investment flows into the operations of the privatised operators. There continue to be no reliable statistics on Brazilian road freight haulage. However, based on the estimates we expect freight carried to be growing more slowly than rail, at an average of around 5.1% a year, because investment to improve and repair the highway network will take longer to have an effect. Despite the collapse of Varig, the catastrophic TAM accident of July 2007, and real concern over the ability of the air traffic control system to cope, underlying demand for air freight will remain resilient. We now expect the growth figure in 2010-2014 to be an annual average of 6.9%. Total traffic carried by Brazilian shipping will rise by an average of 8.1% per annum in the forecast period, compared to 7.7% registered in the preceding five years.
Brazil Freight Transport Report Q1 2010: http://www.companiesandmarkets.com/r.ashx?id=0L76412HG169540
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