Affected by economic recession, political turmoil, mining downturn, high inflation and the devaluation of domestic currency, the scale of construction machinery market in Brazil dropped by 0.7% YoY to US $ 16.07 billion in 2016, marking a negative growth trend for three consecutive years. It is estimated that the market downturn in Brazil will remain difficult to reverse in 2017 with a market size of US $ 16.09 billion, an increase of only 0.1% over the same period of previous year.
In the near term, the fall of Brazil's inflation and the stabilization of Real have all played a direct supporting role in the demand recovery of the construction machinery market in the country. However, the rate hike by the Federal Reserve will aggravate the capital outflow and the appreciation of the U.S. dollar will lower the commodity prices again. Brazil, Countries such as Argentina, which have higher external debt or are overly dependent on commodity exports, are still likely to continue their downturn.
In the downstream, affected by the sluggish international commodity markets, especially mining, the industrial production index of Brazil's mining and quarrying industry has been declining steadily in recent years. This area may be slightly improved in 2017 with the international market. However, . Brazil's construction industry itself also faces development challenges such as a decline in investor confidence, a lack of real estate development, a reduction in the number of bidders for new construction projects, and unemployment of construction workers after the Olympic Games. Oddbrecht, Brazil's largest construction company, was also revealed in Brazil's large anti-corruption "car wash operation." In addition, the economic crisis caused a record high in Brazil's fiscal deficit. In 2016, the Brazilian government's fiscal deficit was the highest since 1997, and the deficit for three consecutive years will also restrain the recovery of the industry.