BMI View : The construction industry should return to growth in 2016, with 0. 80 % real growth after years of strong contraction. Nevertheless, growth will remain weak over the next few years as a weak domestic economic environment and ongoing policy and regulatory uncertainty are undermining investor confidence and we expect to see limited gains in terms of fixed capital formation.
Forecasts And Latest Updates
Weaknesses in France's labour market - in terms of unemployment and lack of competitiveness - support our modest outlook over the country's construction industry.
This quarter, our Country Risk team further revised down France's GDP growth forecasts for 2016 and 2017 to 1.3% and 0.9%, respectively. Prior to the revision they forecast 1.4% growth in 2016 and 2017.This is on the back of the Brexit referendum results and the likely exit of the UK from the EU as France is among the most exposed countries to the UK leaving the single market via the foreign direct investment and trade channels. This has the potential for us to revise our construction industry growth forecast to the downside, based on whether projects are impacted.
Our outlook for the residential and non-residential construction sector in France remains subdued. Following severe contractions over the past four years, we expect to see modest, but positive growth from 2016 onwards. However, annual expansion will remain in the low single digits throughout the forecast period to 2025, with few catalysts in place for stronger growth.
Transport infrastructure remains the strongest sector in France's construction market, with annual average growth of 3.0% expected throughout the forecast period to 2025. Railway and metro projects attract the majority of the investment in the sector. Notably, construction of the first phase of the EUR25bn (USD28.42bn) Grand Paris orbital express metro network in France officially started in June 2016.
France's energy and utilities infrastructure sector is expected to record minimal growth in 2016, and grow moderately thereafter. We have increased our growth outlook for the sector on the back of our Power team's increasingly optimistic view on opportunities in the solar and wind power sectors. Improved regulatory clarity, strong government support and ambitious targets for non-hydropower renewable is seeing increased industry uptake prompting us to revise upwards our energy and utilities growth forecast.
|f = BMI forecast. Source: National Institute for Statistics and Economic Studies, BMI|
|Construction industry value, EURbn||103.50||104.95||107.80||111.04||114.92||119.01||123.19||126.85||130.57||134.36||138.22|
|Construction Industry Value, Real Growth, % y-o-y||-3.80||0.80||1.57||1.55||1.80||1.70||1.66||1.12||1.05||1.03||1.00|
|Construction Industry Value, % of GDP||4.7||4.6||4.6||4.6||4.6||4.6||4.6||4.6||4.5||4.5||4.5|
France's Infrastructure RRI score remains subdued this quarter at 69.98, lagging its regional peers, ranking eighth out of 11 countries in the region.
With sub-2% y-o-y sector growth, its Industry Rewards score remains limited, despite the size of the industry value.
A strictly regulated market, the dominance of large traditional domestic players, high unemployment and strong trade unions are preventing higher scores for Industry Risks. The country scores 75.0 for this variable, falling short of the developed market average of 80.9.
|Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
The France 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 France Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the French infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for France to test other views - a key input for successful budgetary and planning in the French infrastructure market.
- Target business opportunities and risks in the French infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in France.
- 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.