Williamstown, MA -- (SBWIRE) -- 1/2/2010 -- Brazil's construction industry has been hit by the global downturn. However, the government, through its ongoing growth acceleration programme, is working to support infrastructure investments. As a result, in BMI's Q209 Brazil Infrastructure Report we believe that there will be growth in the value of the construction industry in 2009, of 2.49% year-on-year (y-o-y), reaching a value of BRL139bn. So far in 2009 there has been activity in the various construction subsectors, much of which is supported by the Programa de Aceleração do Crescimento (PAC), the government's growth acceleration plan . In the transport sector, the government announced a US$2bn upgrade for the Port of Santos. A number of road and rail concessions were launched, and in January, the RodoBahia consortium, including Spain's Isolux Corsan, was awarded a US$868mn 25-year highway concession in Bahia state, including upgrading 550km of highways. The power sector has also seen significant developments. The Angra III nuclear power plant (NPP), which has been in the pipeline for over two decades, was given environmental approval in March 2009. The NPP, which is being developed by Eletronuclear, will boost Brazil's nuclear power capacity by 1,400MW when it is completed in 2014. The Belo Monte 11.2GW, US$4.1bn hydropower plant is also moving along with Eletrobrás submitting the environmental impact study in March 2009. Work is also due to start on the Jirau hydropower plant, with the Brazilian Development Bank awarding GDF Suez and its partners a US$3.1bn loan for the project. In the construction sector, the government approved US$152bn for the construction of low income housing over the next 15 years. Commercial and tourism construction is also set to get a boost from preparations for the 2014 World Cup, which ABDIB estimates will cost US$43bn in preparation costs. However, Brazil's construction industry in general is expected to take a hit over 2009. This is due to falling private sector investment due to difficulties in financing projects and risk aversion in the markets in general. In addition, the declining macroeconomic climate (real GDP contraction of 0.6% forecast in 2009), due to falling demand for Brazil's key revenue source (exports), will impact demand for construction. Indeed, in February 2009 it was announced that at least BRL10bn (US$4.5bn) of investment into private infrastructure projects had been delayed or cancelled since September 2008. Currently the sector is being propped up by the PAC, the government's growth acceleration programme which - including a boost allocated in February 2009 - envisages BRL642bn invested in infrastructure projects between 2007 and 2010. BMI notes that the PAC is one of the key elements maintaining Brazil's construction industry real growth at a positive level, especially in light of the value of cancelled and delayed projects from the private sector. The government has repeatedly noted that investments under the programme are safe, and has stated that 83% of the projects currently being developed under the PAC were running on schedule. In addition, the government announced that public investment in infrastructure increased by 50% y-o-y in 2008 compared to 2007, reaching US$4.92bn, as reported by Dow Jones Newswires.

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