BMI View: Germany's solid economic performance continues to present upside risks to our construction industry forecasts over 2016 and 2017, although we note a lack of investment from the government and corporations means growth will trend lower over our 10-year forecast period. The rail infrastructure and renewables projects remain the market's bright spots.
Latest Updates And Structural Trends
This quarter we maintained our forecast that Germany's construction sector will register healthy real growth rates of 1.8% and 1.4% in 2016 and 2017 respectively. Our longer-term outlook also remains stable, with the industry's annual growth rates averaging 1.3% between 2016 and 2025.
Germany's net transport infrastructure industry's value has been contracting for four consecutive years now, declining by another 1.9% y-o-y in 2015. While we forecast a strong recovery 2016, with the growth rate forecast at 3.1% y-o-y, the pace of expansion will decelerate gradually across our review period to 2025, averaging 1.7% growth per annum.
In March 2016, the German government outlined its plans to spend about EUR260bn over the next 15 years to upgrade its infrastructure. According to Reuters reports, around 70% of the funds will be allocated to transport infrastructure. Although the details of this plan are still being worked out, it poses a strong upside risks to our current growth projections.
In 2015, energy and utilities industry value registered 2.6% expansion in real terms on account of strong performance in the power plants and transmission grids segment. Over our 10-year review period to 2025, we forecast the industry to register sustained, albeit slower real growth rates of 2.2% per annum.
Germany will launch two tenders in 2017 for offshore wind capacity totalling 2.92GW, according to draft plans published by the federal Ministry for Economic Affairs and Energy.
|e/f = BMI estimate/forecast. Source: Federal Office of Statistics, BMI|
|Construction industry value, EURbn||128.09||131.80||135.43||140.24||145.00||149.50||154.13|
|Construction Industry Value, % of GDP||4.2||4.3||4.3||4.3||4.3||4.3||4.3|
|Construction Industry Value, Real Growth, % y-o-y||0.30||1.80||1.35||1.85||1.50||1.20||1.20|
Germany's overall Infrastructure RRI score remained stable at 73.0 in Q316, but the country fell to the fourth position among 17 regional markets.
Industry Rewards are low by global standards, with Germany scoring 62.5 out of 100. Despite being a large market, tepid growth limits the market's attractiveness.
Germany is one of the highest scoring markets globally for Industry Risks. Germany's infrastructure industry boast a number of well established companies operating in Germany and abroad, while its public procurement and tendering procedures are highly efficient and transparent.
|Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
The Germany 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 Germany Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the German infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for Germany to test other views - a key input for successful budgetary and planning in the German infrastructure market.
- Target business opportunities and risks in the German infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Germany.
- 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.