Market overview: Brazil | KPMG | ZA

Market overview: Brazil

Market overview: Brazil

Brazil’s recent hosting of – and preparations for – the 2014 FIFA World Cup put the spotlight on the limitations of Brazil’s government in implementing large-scale infrastructure projects.

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In part, this was due to rapidly shifting economic realities. In 2007, when Brazil first lobbied to host the event, the country was experiencing an economic boom. But when it came time to implement the infrastructure, the economy had changed and the country was struggling with construction capabilities.

With the world watching, preparations became delayed. Poor safety standards at construction sites led to many workers being injured or killed on the job while limitations on infrastructure management led to pushbacks on major deadlines. The most conservative estimates put total investment by the government on the World Cup at US$3.5 billion.

Controversy surrounded many of the projects such as the Arena Amazonia – a stadium built in the middle of a rainforest – which has led many domestic and foreign observers to wonder whether the country has the proper planning skills to effectively utilize its financial resources for funding infrastructure in the long-term. 

Poor planning and investment controls on infrastructure spend related to both the 2014 FIFA World Cup and the 2016 Summer Olympic Games has also raised concerns from many of Brazil’s citizens who are critical that the investments are not being resourced expertly enough to benefit the country’s own people. 

Corruption is another issue that is frequently noted by those operating in Brazil’s infrastructure sector. Current scandals at Petrobras, for example, have shaken investor confidence and significantly undermined the country’s infrastructure market.

For Brazil, the hope is that mandates such as PAC-1, PAC-2 and PIL will improve these limitations. By effectively prioritizing infrastructure investments towards the needs of Brazilians, the government will be able to slowly increase stability within the country in the long-term.

 

To learn more, read our full report (PDF 2.5 MB) on economic prioritization, including case studies from Brazil and other markets.

© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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