Construction sector registers its lowest growth in 13 years

Juan Carlos Salinas reports for El Deber:

In 2018 the Gross Domestic Product of the sector closed at 3.54%, according to the INE. In 2007 there was the highest growth with 14.35%. For analysts, it is the effect of deceleration.

For the first time, in 13 years (2006-2018), the performance of the construction sector recorded its lowest growth, closing last year by 3.54%.

To this data, it should be added that since 2006 construction, a thermometer to measure the growth of the country, was always higher than the Gross Domestic Product (GDP), something that did not happen last year, because according to the National Institute of Statistics (INE) , the Gross Domestic Product of Construction (PIBC) was 0.68% lower than the GDP, which was 4.22%.

By way of illustration in 2006, the GDP was 4.8% and that of construction reached 8.25%, while in 2007 the GDPC grew at 14.35% and the national GDP was 4.56%. In the middle of a crisis, Bolivia’s growth in 2015 was 4.86% and that of construction was 5.36%. In 2017 the GDPC came up with 4.99% to the national expansion that closed in a 4.20%, finally in 2018 the activity of the sector fell to 3.54% and was lower than the GDP that reached the 4,22%.

On the subject, Rolando Schrupp, former president of Cadecocruz, considers that the ‘real estate empirical market’ has fulfilled its current cycle. Among the factors that influenced, according to his criteria, in the situation of the construction sector are the end of the country’s golden decade, the state deficit, true inflation, the over-bureaucratization of the country, instability and democratic manipulation.

In turn, Agustín Jiménez, former president of the Association of Economists of Bolivia, argued that without doubt that construction is a multiplying sector of jobs and income generator, but that the current situation is only a reflection of the economic slowdown of the country, where the Government is changing its investments in sectors of primary necessity (in hydrocarbons and agriculture), while the private sector does not have the capacity to attract greater investments.

“From the Ministry of Economy explained that the stability in growth and dynamism recorded by the construction sector in recent years, whose average growth (8.14%) far exceeds the average of 1993-2005 (1.79%) – It is mainly due to the macroeconomic stability that the Government has composed, and to the important levels of public investment -oriented especially to infrastructure.

Different visions

On Tuesday, Luis Arce, Minister of Economy and Finance, argued that the construction sector of the country has a ‘very high’ rate of profit, despite the fact that the national companies still can not win big projects because of their small size.

To which, the Bolivian Chamber of Construction replied that if the sector had these high profits, in these six years would not have closed in Bolivia 2,293 construction companies. “Taking into account that the business base to 2018 was 12,757 companies, in just six years has closed 18% of the firms in the sector,” they said.

Published by Bolivian Thoughts

Senior managerial experience on sustainable development projects.

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