The Year 2018 is expected to be something more than special for Brazilian economy and especially for generator set market as recession seems nearing its end with the change of calendar. The country experienced worst historic recession witnessing massive turbulence in its economy in past couple of years.
According to International Monetary Fund (IMF), the Gross Domestic Product (GDP) of Brazil is estimated to grow by 1.3% keeping inflation below 4.5% in 2018.
With lowering inflation, the real interest rate is also decreasing. This is predicted to create investment supportive environment in the country. The slow economic recovery is transpiring business optimism among the investors of all sectors like constructions, mining, manufacturing, etc.
The revival of these sectors is expected to drive the market of generator set gradually in short and mid-term. It is expected to grow below 2% CAGR reaching less than 12,000 units sales by the end of 2021. This is four times higher than that of Argentina and more than one and half of Mexico’s projected unit sales over the same time frame, 2021.
Besides improvement in general economy, the revival of genset market will be contributed by the investments in telecom and data centers as digitization and mobile transactions are rising gradually in the country. Similarly, slow growth in construction—condominiums and apartments—will drive the sales of both gensets—gas and diesel. However, diesel genset will dominate the market as best option in comparison to gas-powered due to absence of gas in various locations of the country.
Moreover, by application, the deficiency in the power grid is predicted to push the sales of standby and prime and continuous power genset. Such gensets are preferred choice of critical sectors like healthcare, data centers, telecom and financial sectors. They are likely to purchase gensets of mid-range—150.1kW to 500kW.
The slow revival of Brazilian economy will be presenting millions of dollars opportunity to almost 20 genset competitors by the end of 2021. Of the total participants, three are key market players—Stemac, Cummins and SDMO. They are expected to dominate the market in short and mid-term capturing major portion of the pie as its total value of market is estimated to be US $640 million.
The slight growth in competition witnessed among major market participants of gensets since third quarter of 2017 has been propagating positive message to Brazilian economy. Although slow, but increasing trend in the sales of gensets at this time around (while emerging out of recession) indicates that country’s overall economy is gradually coming back to track. This is because power is the first requirement to drive the economy of any country and genset ensures its availability.
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Subarna Poudel is a researcher with Frost & Sullivan. He can be reached at firstname.lastname@example.org
Sapan Agarwal drives content and marketing for Frost & Sullivan. Sapan is based out of Kuala Lumpur Malaysia and can be reached at email@example.com | +603 6204 5830