BMI View : The security situation will improve in 2017, but public spending will remain constrained by low hydrocarbons revenues and a wide fiscal deficit. However, investment, driven by institutional funding, stabilising oil price and FDI , especially in its hydrocarbons industry and gas pipeline infrastructure , will see the return of fixed investment and reconstruction in 2017 . Meanwhile, the project pipeline remains swollen with large residential developments, but the investment and operating environment make it exceptionally challenging to conduct business.
Forecast & Industry Developments
Security and macroeconomic headwinds facing the industry are still firmly in play, despite IS expected to be removed in the next few quarters. Our short-term view remains unchanged with only growth of 1.3% forecast for 2017 after several years of contraction.
Long-term growth of a forecast 3.6% annually to 2025 is far below the country's potential, given the need for major reconstruction after years of war. In January 2016 Baghdad cancelled projects worth IQD10tn (USD9bn) and postponed another 2,169 projects worth IQD37tn that had been approved in the 2015 budget as the government faces a severe fiscal crisis brought about by a drastic fall in its oil revenues.
The Iraqi government also announced in January it would not approve projects in 2016.
Nevertheless, our core view is for oil prices to rise from H216, which, along with the gains against IS, could set in motion a return of investment and activity in the construction sector from 2017.
|e/f = estimate/forecast. Source: National sources, BMI|
|Construction industry value, IQDbn||19,085.06||18,321.66||19,237.74||21,276.94||23,717.41||26,376.13||29,288.05||32,313.51||35,422.07||38,578.17||41,741.58|
|Construction Industry Value, Real Growth, % y-o-y||-7.85||-6.16||1.25||5.35||6.47||6.21||6.04||5.33||4.62||3.91||3.20|
|Construction Industry Value, % of GDP||9.2||9.5||8.7||8.3||8.2||8.1||8.2||8.1||8.1||8.0||7.8|
We have significantly revised downwards our BMI Infrastructure RRI for Iraq over the past year, largely due to deteriorating Industry Rewards and Country Risks scores.
The many downside risks facing the country are exacerbated by the rise of the Islamic State (IS) and strikes targeting infrastructure.
The overall score of 40.5 remains unchanged this quarter, but Iraq stays firmly in the bottom half of the table of 14 countries in our Middle East and North Africa (MENA) regional index.
Project delays, false starts, political divisions and security risks will all weigh on Iraqi construction industry growth forecasts over the medium term (2015-2019) at least.
|Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
The Iraq 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 Iraq Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Iraqi infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for Iraq to test other views - a key input for successful budgetary and planning in the Iraqi infrastructure market.
- Target business opportunities and risks in the Iraqi infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Iraq.
- 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.