The Growing Construction Industry is Driving The Market Growth of Paints And Coatings Market in Chile and Peru
Growing construction industry along with the increase in the automotive sector is propelling the Chile and Peru paints and coatings market. However, COVID-19 has exposed many challenges for the paints and coatings market by impacting the architectural sector in 2020. Before COVID-19 pandemic the growth of the construction industry in Chile and Peru was positive due to increasing construction activity, especially in Chile. According to industry experts Chile construction industry is expected to grow at 2.3% in 2018 and 2.7% in 2019, but due to the pandemic the industry growth is restricted to -1.4% in 2019.
This is majorly due to the falling investment by the private companies. According to the Chilean Chamber of Construction (CChC), there are currently 778 housing projects paralyzed across the country (747 in the Santiago Metropolitan region and 31 in other regions) due to the new lockdown measures announced by the government in mid-May 2020.
However, the construction activities are recovering in Chile and Peru which will boost the paints and coatings market during the forecast period.
Peru represents the fifth-largest South American country in terms of the nominal GDP. The business environment is favorable to investors, and the Peruvian construction market is expected to follow a high-performance trajectory. Several new construction projects have been announced by the Peruvian government, and this is expected to increase the construction rate in the country.
This includes an amount of USD 2.8 billion proposed by the government to develop hospitals, public works, etc. This scenario is expected to propel the demand for paints and coatings in the country in the next few years.
The country is currently in dire need of various infrastructure projects to meet the rapidly growing demand for both public and private infrastructure, such as roads, ports, telecommunications, airports, health, water and sewage, education, and energy. The U.S. International Trade Administration (ITA) in October estimated that Peru’s general infrastructure needs by 2025 will require an investment of close to $160 billion, involving an annual investment of 8.3 percent of GDP for nine consecutive years.
To help fund the initiative, Peru’s government is rapidly engaging public-private partnerships (PPPs) to increase private investment in infrastructure from a current 4.5 percent of GDP to six percent by 2021.
In terms of the total housing demand, the Ministry of Housing, Construction, and Sanitation (MVCS) estimated the total housing deficit in Peru to be over two million homes. In addition to this deficit, the country needs to renovate over 1.5 million houses to reduce the housing infrastructure gap. Peruvian infrastructure program is the national reconstruction authority, the Autoridad para la Reconstrucción con Cambios. Its 2018 mandate was to initiate projects on the rehabilitation of over 540 bridges, 6,000 kilometers of national roads, 30,900 kilometers of rural roads and 45,000 kilometers of irrigation canals affected by the floods and mudslides during the early months of 2017. Additionally, a reform package for the health sector, introduced in late 2013, was launched to include rehabilitation, construction, and equipment of 206 primary care centers, construction of 170 provincial hospitals, construction of 23 regional hospitals and construction of 13 national hospitals.
Private sector investors also have plans to build more hotels in Peru over the next several years, like Hilton, which has announced two new hotels by 2021. The new investments could double the value of hotel investments over the past five years, according to one industry estimate.
Hence, from the above-mentioned factors, the construction and infrastructure sectors in Peru are expected to witness massive growth over the coming years, and this is expected to rapidly increase the demand for paints and coatings.
COVID-19 pandemic has been the most disruptive force for the Chile & Peru paint and coating industry in recent memory. The Chile & Peru paint and coatings industry has seen demand nose-dive in the last four months in an unprecedented manner. Although production at most of the paint production units has resumed in a staggered manner, the continuing rising number of cases and falling demand has caused anxiety among the leading paint and coating producers. Considering the fact that only 10 days of lockdown was included in these results, paint producers are jittery about the performance of the first six months (April-September 2020) of the current financial year.
The pandemic and lockdown conditions enforced throughout both countries has caused huge disruption in the whole production and supply chain of the domestic paint and coatings industry. The paint industry is also facing a massive shortage of skilled and unskilled labor lockdown forcing a large proportion of the workforce to their homes.
All the paint producers in the country had to suspend manufacturing for more than 30 days. After that, partial production resumed at some of the manufacturing units in phases. However, the safety and health of industry’s employees, customers and users has always been paramount to companies. Paint and coatings production is highly automated, and most people do not work in close proximity to complete necessary tasks.
While the paint industry witnessed a loss of revenues for about 35-40 days, manufacturing has resumed now, barring the plants that are in the containment zones. Pre-COVID-19 demand levels in the Peru paint industry may return around the mid of the year. Automotive paint producers have been badly impacted by the lockdown over the last few months. Sales numbers have improved since then, but most automakers fear that the pandemic-induced economic contraction would worsen the situation in the auto industry.
The industrial business segment under the automotive coatings and industrial coatings continue to be impacted by the downturn in the automotive industry and the overall slowdown in the economy. A complete shutdown of business in the last few months. At the same time, competitiveness could be affected by the rise in operating costs due to strict biosecurity measures required by countries before manufacturing companies in the region can restart production. As a result of new requirements around hygiene, employee transportation and infrastructure, the maximum number of workers allowed in a shared space will be restricted, affecting productive capacity.
The World Bank estimates that the COVID-19 crisis could reverse years of growth in Chile’s middle-class, reducing its size by nearly two million individuals in just a few months’ time and pushing new middle-class households back into poverty, mainly due to catastrophic health expenditures and unemployment. This factor will impact the purchasing power of the middle class which hamper the market in the country.
DataM Intelligence was incorporated in the early weeks of 2017 as a Market Research and Consulting firm with just two people on board. Within a span of less than a year, we have secured more than 100 unique customers from established organizations all over the world.
For more information:
Sales Manager at DataM Intelligence
Email: [email protected]
Tel: +1 877 441 4866
Tags: #chile and peru paints and coatings market, #chile and peru paints and coatings market size, #chile and peru paints and coatings market share, #chile and peru paints and coatings market trends, #chile and peru paints and coatings market value, #chile and peru paints and coatings market growth, #chile and peru paints and coatings market demand, #chile and peru paints and coatings market industry forecast, #chile and peru paints and coatings market outlook, #chile and peru paints and coatings market analysis, #chile and peru paints and coatings market applications, #chile and peru paints and coatings market companies, #datamintelligence