Construction in Argentina – Key Trends and Opportunities to 2019

Date: 2015-11

“• Currency devaluation and high inflation are the two large economic concerns in Argentina, and have impacted its growth prospects. According to the Instituto Nacional de Estadística y Censos (INDEC), the country recorded average annual inflation of 16.1% in January–September 2015. The country’s official inflation rate was 24.0% in 2014, whereas the unofficial figure was close to 40.0%. Rising prices reduced the consumer purchasing power, demand, and business and consumer confidence. A weakened currency was also a factor driving inflation. The Argentine peso depreciated against the US dollar by nearly 23.0% in 2014, making imported products much more expensive.

• The Argentine construction industry is expected to be supported by funding from China to help develop the country’s infrastructure. In order to finance construction projects in Argentina, China signed a loan agreement worth ARS60.6 billion (US$7.5 billion) with Argentina in 2014.

• In 2014, Argentina signed a contract with Chile to construct a 13.9km trans-Andean Agua Negra tunnel. The project will provide a link between the province of San Juan in Argentina and Chile’s Coquimbo region, and will reduce the cross border path by 44km. The total investment for the project is estimated at ARS11.1 billion (US$1.4 billion).

• In order to produce clean and cheap energy to meet rising demand for electricity, the government is focused on developing nuclear energy sources, which will boost the country’s construction industry and economy. Accordingly, to enhance the country’s energy infrastructure, the government is seeking help from foreign investors. To help the government meet its targets, in February 2015 the Chinese government signed an agreement with the Argentine government for the construction of two nuclear power projects in the country.

• In September 2015, a new renewable energy law was passed by Argentina’s Chamber of Deputies, a legislative body, to speed up the expansion of the country’s alternative sources of energy generation. Under this law, the government aims to generate 8% of the country’s total electricity needs through renewable sources by 2017, and 20% by 2025. Accordingly, to accomplish this target, the government announced a trust fund for the development of renewable energy sources, which will help to finance renewable energy projects in the country.”

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