Construction sector in Peru foresees recovery in 2024 after negative figures. Optimism towards upward trend and challenges to overcome.

The Peruvian Chamber of Construction (Capeco) has revealed encouraging data for the sector, which foresees a recovery after a 2023 marked by negative figures. After experiencing a -7.9% collapse last year, 2024 has started with signs of improvement, showing a growth of 5.65% between January and April. These positive figures have generated optimism among constructors, who view favorably the upward trend expected to continue in the coming months. According to Capeco's estimates, it is expected that in May 2024, the construction sector will record a 4.1% increase, mainly driven by the rise in the execution of state projects, despite the decrease in cement consumption. Guido Valdivia, executive director of Capeco, highlighted that both domestic cement consumption and the execution of state projects have shown positive results in recent months, with the latter being the fifth consecutive month of growth. During the presentation of the Construction Economic Report, Valdivia pointed out that the public sector has executed around 25% of its investment budget until May, representing a record in terms of infrastructure spending. This increase in public investment has generated favorable expectations among sector entrepreneurs, who project a 4% growth by the end of the year. Despite the positive outlook, there are risks threatening the development of the construction sector. According to a survey conducted by Capeco, sector entrepreneurs identify the government's execution capacity at various levels of government, both national and subnational, as the main threats. Inefficiency in management and lack of confidence in authorities are aspects that could negatively impact sector growth. In this regard, the recent approval of the new Public Procurement Law has been received with optimism by Capeco, although it has also raised some reservations. Valdivia emphasized that while it is an important step forward, there are still aspects to improve in the regulations, especially concerning Government-to-Government (G2G) agreements, which, while beneficial in specific cases, do not represent the complete solution to the sector's challenges. It is important to note that despite the positive outlook regarding construction sector growth, entrepreneurs are becoming increasingly cautious in their investment projections for new projects. Loss of confidence in authorities and uncertainty about government management efficiency have led to a more conservative stance among investors. In conclusion, although the construction sector in Peru shows signs of recovery and growth for 2024, it is crucial to effectively address the risks identified by entrepreneurs, strengthening government execution capacity and fostering greater confidence in the business environment. The path towards a strong and sustainable construction industry involves overcoming current challenges and promoting a favorable environment for investment and the country's development.