BMI View: Our forecasts for the Czech construction and i nfrastructure sector remain steady this quarter , with marginal growth of 3.4% for 2015 and 2.9% for 2016 . After struggling with underfunding for many years, the transport sector is enjoying EU-driven investment into its four trans-European transport corridors, which will sustain growth, particularly in the rail and roads sub-sector s , in the medium term. Residential and non-residential construction are further bright spots, with investor sentiment improving, house prices rising and new construction starts on the rise.
Latest Updates And Structural Trends
In the Czech Republic, growth will be driven mainly by dynamic private consumption in 2016 and will be sustained by gradually increasing exports and capital expenditures, although the latter will be hindered by geopolitical instabilities. Robust household disposable incomes, decreasing unemployment, low inflation rate and the increasing trade ties with neighbouring Germany and Austria are the main reasons for the country's growth in the coming years.
Over the coming years we expect the EU's EUR63.4bn transport-focused Cohesion Fund to play a central role in financing Central and Eastern European (CEE) infrastructure. In late 2013, the European Council officially adopted the EU's multi-annual financial framework for 2014-2020, setting the parameters for the Cohesion Fund and Connecting Europe Facility, which will support the funding of the TEN-T transport corridors and the TEN-E energy networks. The projects included in the TEN programmes have a heavy weighting towards the less developed networks in CEE.
In January 2016, the Minister of Industry and Trade Jan Mladek stressed the necessity for a resolution of the spat with the independent energy regulator, ERU, which was threatening to stall payment of around CZK42bn in renewables subsidies for 2016 unless it was given sufficient assurances that objections from the European Commission would not be raised (Radio Prague, 2016).
On January 4, 2016, CEZ announced a sharp decline in electricity generation from its two nuclear plants (i.e. Dukovany and Temelin) in 2015. The total net production from the two plants last year came to 26.83 TWh compared with around 30.32 TWh in 2014 (Radio Praha, 2016).
Czech Prime Minister Bohuslav Sobotka said a call for bids for a new unit of the country's Dukovany Nuclear Power Station will be announced by end-2016. 'The government intends to install a new unit in each of the Czech nuclear power plants - Temelin and Dukovany. Construction of the first unit will begin in Bohunice [in western Slovakia] since it is much older than Temelin,' said Sobotka (Sputnik News). Westinghouse Electric Company, Rosatom and Areva, among other firms, are expected to place their bids for the new unit.
In August 2015, Czech Industry and Trade Minister Jan Mladek declared the approval of National Action Plan of nuclear energy, which focuses on the completion of the nuclear reactors, and the National Action Plan for the smart grid as well as an amendment to the Energy Act that simplifies the lives of Czech citizens who want to install a solar power station on the roof or get a small cogeneration unit to produce energy for their own consumption.
As part of the TEN-T Orient/East-Med corridor, SZDC selected a joint venture (JV) between Mott MacDonald and Sudop Praha to carry out two studies for a high-speed line connecting Germany and the Czech Republic. The line, which will link Dresden, Germany, to Usti nad Labem and Litomerice in the Czech Republic, will pass via the Ore mountains to avoid existing railway congestion through the Elbe valley. The JV will conduct geotechnical investigations and environmental impact assessments to select a route. It will also perform preparatory works for design phases concerning technical investigation for major bridges and long tunnels.
In November 2015, overall construction grew by 1.5% y-o-y, in real terms. Meanwhile, civil engineering grew 11.4% y-o-y (Czech Statistical Office, 2016).
|e/f = BMI estimate/forecast. Source: Czech Statistical Office, BMI|
|Construction industry value, CZKbn||213.31||223.76||236.97||252.25||268.12||286.54||304.27|
|Construction Industry Value, Real Growth, % y-o-y||3.35||2.90||3.10||3.55||3.29||3.87||3.19|
|Construction Industry Value, % of GDP||4.8||4.8||4.7||4.8||4.8||4.9||4.9|
Czech Infrastructure Risk/Reward Index score is 65.2 out of 100, compared to 64.6 last quarter, but it is still high by regional standards ( 61.5).
The improving economic environment, the strengthening public sector investment outlook and the increased EU funding lead to the country's Industry Rewards score of 55.0 out of 100, which is high by regional standards ( 50.2).
Compared to the regional average of 67.1, the country scores well in terms of Industry Risks (75.0 out of 100), owing to its competitive and open infrastructure market as well as the presence of the world's largest construction companies.
|Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
The Czech Republic 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 Czech Republic Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Czech infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for Czech Republic to test other views - a key input for successful budgetary and planning in the Czech infrastructure market.
- Target business opportunities and risks in the Czech infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Czech Republic.
- 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.