A sea of opportunities in the state of Ceará

The state’s economy grows more than three times the rate for the rest of Brazil in 2012 and, today, represents a new frontier of opportunities for investment and of demand for infrastructure and industrial property construction

If, in the world today, Brazil is the “ball in play” in terms of economic development and the ability to attract investment, both internal and foreign, then the Brazilian Northeast is the ball that’s directly ‘in front of the goal’, for the vigor that the region has demonstrated over the past few years in various segments of the economy. And, in the context of the region, the state of Ceará has assumed the flagship position, along with the Northeast’s state of Pernambuco. According to estimates made by the ‘Instituto de Pesquisa e Estratégia Econômica do Ceará’ (IPECE - Ceará Institute of Economic Research and Strategy), an agency linked to the state’s 'Secretaria de Planejamento e Gestão’ (SEPLAG - Department of Planning and Management), Ceará’s Gross State Product (GSP) grew, in 2012, 3,5% compared to the previous year; a result that represents the production of R$ 94.655 billion (US$ 47.33 Bn). That represents a per capita GSP of R$ 10,999 (US$ 5,499).

The economy of Ceará, therefore, was reported to have grown over three times as much as the nation’s economy which, in 2012, grew 1% when compared to the previous year.

The sector of services, especially services focused on activities in the area of tourism, was the fastest growing. IPECE data reveal that, in the third quarter of 2012, the sector achieved growth of 6.48% in comparison with the same period last year, and compared to growth of 1.4% in the national rate. Year 2012 was a milestone in the history of tourism in Ceará. According to Google website search data, the capital of Ceará, Fortaleza, represents the third most popular tourist destination in Brazil, below São Paulo and Rio de Janeiro alone. This result takes into account trends in searches made throughout 2012.

Furthermore, in October 2012 a survey commissioned by Brazil’s Ministry of Tourism and conducted by the ‘Fundação Instituto de Pesquisas Econômicas’ (FIPE/USP - Institute of Economic Research Foundation) revealed Fortaleza as the capital city that arouses the most interest among tourists considering places they’d like to know. Among all the tourist destinations in the country, Fortaleza came in second behind the archipelago of Fernando de Noronha alone.

During this high season, which goes from December 2012 through February 2013, 980 thousand tourists are expected to come to Ceará, via Fortaleza. This represents an increase of 7.02% compared to the same period starting in December 2011. The per capita spending among these visitors is expected to grow by R$ 110,00 (US$ 55.00) - an increase of 7.19% generating direct revenues of R$ 1.607 billion (US$ 803.5 million) and an impact of R$ 2.812 billion (US$ 1.406 Bn) in the local economy.

To Secretary of Tourism Bismarck Maia, the good positioning of Ceará in the country’s tourism market is the result of the effort that has been made in establishing the state as a reference in the area, “via the qualification of people and spaces, associated with continuing promotion focused on the final consumer,” he explains.

Construction drives growth

The second highest rate of economic growth was thanks to Ceará’s industrial sector, which reported an increase of 4.14% in the third quarter of 2012 and tallied 2.61% growth from January to September. The result was mainly influenced by the performance of civil construction which grew 6.20% throughout the period, driven - according to the ‘Sindicato da Indústria da Construção Civil’ (SINDUSCON - Union of the Construction Industry) of Ceará - by the works included in the federal government’s Programa de Aceleração do Crescimento (PAC - Program for Acceleration of Growth); ‘Minha Casa, Minha Vida’ (MCMV - My Home, My Life) program; hotel infrastructure and structuring of the state’s capital city and of the state to hold the games of the Confederations Cup and the 2014 FIFA World Cup.

The number of contracts under the MCMV home-owner program, for Income Bracket 1 - families with monthly incomes of up to R$ 1,600.00 (US$ 800.00) - presented by the Bank of Brazil for the month of November 2012, put Ceará in the runner-up position in the bank’s national ranking of contracts. From a total of 37,000 housing units contracted nationwide, 5,224 are in Ceará, involving investments of approximately R$ 325 million (US$ 162.5 million). According to the vice president of the Realty Area of SINDUSCON-CE, André Montenegro, Ceará will soon move into first place. “In October we were ranked first by the Bank of Brazil in MCMV Bracket 1. We expect to go back to being number one in early 2013 since we have big projects being approved in record time by the bank,” he says.

It isn’t just today that the sector of civil construction has been growing at a more dynamic pace in Ceará than in the rest of Brazil. In 2011, for example, civil construction grew 5.5% compared to the previous year - above the national average of an estimated 3.4%.

Keeping up the pace in 2013

Further according to the IPECE, Ceará’s economy should continue to grow above the national average in 2013, closing the year with a Gross State Product (GSP) 4.0%, higher than the rate of growth for the nation, which is forecasted to be 3.3%. This positive outlook comes from public and private investments in Ceará that enable strategic projects for the development of the state.

In early January, Ceará State Governor Cid Gomes announced a package of construction projects and investments to be implemented throughout the state, with funding estimated at just over R$ 4.9 billion (US$ 2.45 Bn) in order to improve quality of life for Ceará’s citizens. Provided for in the ‘Projeto de Lei Orçamentária Annual’ (PLOA - Annual Budget Law Bill) for 2013, these funds represent about 25% of the R$ 19.521 billion (US$ 9,76 Bn) estimated in the overall budget for 2013. The amount represents an increase of 6.67% over the state budget for 2012 which was around R$ 18.3 billion (US$ 9.15  Bn).

The works under the ‘Monitoramento de Ações e Projetos Prioritários’ (MAPP - Monitoring of Priority Actions and Projects) include investments in highways, the Seaport of Pecém, in Metrofor - Fortaleza’s Metro, rail transportation in the interior of the state, energy, communication, projects for the betterment of riverine  communities, basic sanitation, housing and the environment, among other areas.

Investments in road infrastructure will total some R$ 663.4 million (US$ 331.7 million) divided between construction, paving, recovery, safety and road signage. As regards the Pecém Seaport Complex, R$ 532.4 million will be allocated to be invested in the expansion of several sites, such as intermodal freight terminal and the construction of the port pipeline.

Metrofor - the subway system of state capital Fortaleza - will receive an inflow of R$ 110 million (US$ 55 million) for the Metro’s South Line, while the East Line will get the first investments by the state of approximately R$ 91.4 million (US$ 45.7 million). The complete project will command R$ 3 billion (US$ 1.5 Bn) between Federal and State funds. Also pending, construction work on the ‘Acquario Ceará’, at Praia de Iracema, will have R$ 130 million (US$ 65 million) earmarked. Shrouded in controversy regarding the expropriation of homes along its route, the LRT (Light Rail Transit) project for the Parangaba-Mucuripe line is expected to demand R$ 201 million (US$ 100.5 million).

In the area of sanitation and urbanization, the State Government is expected to invest R$345 million and R$ 270 million (US$ 172.5 Mio and US$ 135 Mio), respectively, in the Maranguapinho and Cocó River projects, which include the implementation of sanitation, urbanization and construction of new housing. The MAPP also provides for other works of basic sanitation and water supply, the construction of new housing and investments in environmental programs.

Construction of the ‘Eixão’ - a canal that will conduct water from the Açude Castanhão to the Vale do Jaguaribe and to the metropolitan area of Fortaleza - foresees the investment of approximately R$ 770 million (US$ 385 Mio).

The results of these projects should have a positive impact on economic activities, particularly in civil construction, fueling even further this cycle of development in the state. If the projections for 2013 are confirmed, Ceará’s GSP should reach R$ 103.826 billion (US$ 51.913 Bn), increasing per capita income to R$ 11,958 (US$ 5,979).