Construction in Ecuador - Key Trends and Opportunities (H2 2021)

The analyst has made a downward revision to Ecuador’s construction industry estimated growth for 2021, with the industry now forecast to record real output growth of 1.6% in 2021, following a contraction of 11.1% in 2020. The downward revision from the earlier forecast of 4.8% in 2021 has been due to the continued weakness in the industry in the first half of the year, owing to a new wave of infections and subsequent lockdown restrictions which weighed on industry output. Reflecting the pandemic’s impact on construction activities, construction value add fell by 5.7% year on year (YoY) in H1 2021, according to the Banco Central del Ecuador (BCE). The country’s total investment in fixed capital grew marginally by 0.7% YoY in H1 2021.

The construction industry is expected to register an annual average growth of 3.6% between 2022-2025, supported by investments in transport, oil, electricity, education, and housing infrastructure projects. Ecuador’s President Guillermo Lasso plans an ambitious program to strengthen the infrastructure of the country, which includes roads and rehabilitating rail infrastructure through Public-Private Partnership (PPPs) over four years from 2021 to 2025. Ecuador plans to invest US$5 billion in the rehabilitation of road corridors such as Buena Fe-Babahoyo-Jujan, Alóag-Santo Domingo, Daule-Progreso, the Loja Catamayo viaduct and the southern access to Cuenca, along with railways and ports. In order to carry out the construction work, in August 2021 the government raised a US$150 million loan from the Corporacion Andina de Fomento (CFA), a Development Bank of Latin America.

Moreover, in August 2021, Ecuador’s ministry of energy and non-renewable natural resources updated the 2031 electricity master plan to allow for the incorporation of 10.4GW of non-conventional renewable energy capacity with an investment of US$2.2 billion. The planned capacity is divided into four blocks, with the first 500MW expected to commence operation by 2024, which includes 220MW of wind, 150MW of small and medium hydro, 100MW of solar photovoltaic (PV) and 30MW of biomass energy. The second block includes 2,500MW, expected to begin by 2025, while the third and fourth blocks include 3,120MW and 4,320MW, respectively, and are expected to commence operations by 2031.

In early November 2021, Mr. Lasso submitted the budget for 2022, which seeks to reduce the public deficit to 3.5%; this is supported by a recovery in crude oil prices and after negotiating a support package with the IMF. Though the government is seeking to reduce public spending, the government is keen to meet its obligation to education and healthcare spending, allocating US$2.4 billion and US$1.5 billion to them, respectively, in the budget. In addition, the government is seeking to implement more market-friendly reforms by selling off state-owned assets such as the ‘Esmeraldas’ oil refinery, and relaxing labor market regulations.

This report provides detailed market analysis, information, and insights into Ecuador’s construction industry, including:

• Ecuador’s construction industry's growth prospects by market, project type and construction activity
• Critical insight into the impact of industry trends and issues, as well as an analysis of key risks and opportunities in Ecuador’s construction industry
• Analysis of the mega-project pipeline, focusing on development stages and participants, in addition to listings of major projects in the pipeline.

Scope

This report provides a comprehensive analysis of the construction industry in Ecuador. It provides:

• Historical (2016-2020) and forecast (2021-2025) valuations of the construction industry in Ecuador, featuring details of key growth drivers.
• Segmentation by sector (commercial, industrial, infrastructure, energy and utilities, institutional and residential) and by sub-sector
• Analysis of the mega-project pipeline, including breakdowns by development stage across all sectors, and projected spending on projects in the existing pipeline.
• Listings of major projects, in addition to details of leading contractors and consultants

Reasons to Buy

• Identify and evaluate market opportunities using the analyst's standardized valuation and forecasting methodologies.
• Assess market growth potential at a micro-level with over 600 time-series data forecasts.
• Understand the latest industry and market trends.
• Formulate and validate strategy using the analyst's critical and actionable insight.
• Assess business risks, including cost, regulatory and competitive pressures.
• Evaluate competitive risk and success factors.