BMI View: Australia's construction industry is poised for an uptick in growth as government supported infrastructure development starts to overcome headwinds presented by a decline in capital expenditure in the mining sector. The Liberal party's plans hinge on promoting additional private sector investment through a shift to a user-pays system for transport infrastructure; however, we not strong downside risk to our positive outlook stemming from political uncertainty in the run-up to federal elections in July.
We maintain our forecasts for an acceleration of growth for the Australia construction industry from 2016, with real growth expected to reach 1.8% in real terms (up from 0.03% in 2015).
This will be driven by a surge in the transport infrastructure industry, with the near-term forecast supported by groundbreakings of a number of high-value road projects and a large project pipeline (valued at AUD184bn).
Additionally, the positive outlook for infrastructure development is supported by policy announcements from the Coalition Government, especially the long list of priority projects in the Australian Infrastructure Plan released in February.
Under the Liberal Party's plans, financing will come in large part from the private sector, through asset recycling and the use of PPPs as the country shifts to a user-pays model for transport infrastructure development.
However, we note strong downside risks to our positive outlook stemming from uncertainty over policy continuity, especially as we draw closer to a federal election in July.
Capital expenditure cuts in the mining and extractive sector will continue to weigh on industrial and overall construction growth. However, this downward pressure will begin to recede as commodity prices bottom in 2016.
|f = BMI forecast. Source: National sources, BMI|
|Construction Industry Value, Real Growth, % y-o-y||1.80||1.94||1.99||3.42||3.02||3.35||3.57|
|Construction Industry Value, % of GDP||8.4||8.4||8.3||8.4||8.5||8.5||8.6|
|Construction industry value, AUDbn||140.48||145.32||151.48||160.60||169.78||180.06||191.35|
Australia has risen to the top position in the Asia Pacific region on our Infrastructure RRI in Q216, with an overall score of 69.1 out of 100.
The Industry Rewards score improved drastically, in line with an improved outlook for construction industry growth. Australia now receives a score of 52.5 for this indicator, up from 45.0.
Australia's performance remains strong in terms of Risks, supported by a transparent operating environment and strong financing availability.
|Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
The Australia Infrastructure Report features BMI Research's market assessment and forecasts covering public procurement and spending on all major infrastructure and construction projects, including transportation and logistics by land, sea and air; power plants and utilities, and commercial construction and property development. The report analyses the impact of regulatory changes and the macroeconomic outlook and features competitive intelligence on contractors and suppliers.
BMI's Australia Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Australian infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for Australia to test other views - a key input for successful budgetary and planning in the Australian infrastructure market.
- Target business opportunities and risks in the Australian infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Australia.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis covering infrastructure and construction, regulatory changes, major investments and projects and significant national and multinational company developments. These are broken down into construction (social, commercial and residential), transport (roads, railways, ports, airports, etc), and energy & utilities (powerplants, pipelines and so on).
Industry SWOT Analysis
Analysis of the major strengths, weaknesses, opportunities and threats within the infrastructure and construction sectors and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (up to 2012) and forecasts to end-2024 for all key industry indicators, supported by explicit assumptions, plus analysis of key developments in the market and risks to the main forecasts. Indicators include:
Construction: Industry value (USDbn); contribution to GDP (%); total capital investment (USDbn); real growth (%).
Construction industry real growth forecasts (%) and industry value (USDbn) forecasts for industry sectors are split into Residential and Non-residential and Infrastructure sectors. Where the data is available for particular countries the infrastructure is further broken down into indicators for the transport subsectors of roads, railways, airports and ports and the energy and utilities sub-sectors of power plants and transmission grids, oil & gas pipelines and water infrastructure. This dataset is unique to the market.
The reports also include analysis of latest projects across the infrastructure sectors (transport, utilities, commercial construction).
BMI’s Infrastructure Risk Reward Index
BMI’s Risk Reward Index provides investors (construction companies, suppliers and partners) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points. These provide indices of highest to lowest appeal to investors, with each position explained.
An assessment of the competitive landscape and key challenges to entering the market. Details of the largest companies active in the sector across the sub-segments of the industry, including the key financial figures from some of the largest players in the sector.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Infrastructure reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.