Latvia Infrastructure Report

Published 09 December 2014

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Latvia Infrastructure Report

BMI View: On the back of deteriorating relations between the EU and Russia over the Ukraine crisis, we have downgraded our 2015 forecast due to low confidence and poor economic performance limiting investment. Having said that, 2014 was the third consecutive year of double-digit growth in the construction industry, as it rebounds from a deep recession. EU transport and energy network funding will be a driver of growth to 2024, while housing and office demand will continue its strong sustainable recovery.

We estimate strong 2014 construction industry growth of 13.4% year-on-year (y-o-y) to EUR1.47bn (USD2.0bn), before moderating to a 5.4% increase and EUR1.56bn (USD2.0bn) in 2015. 2016 and 2017 will average 6% annual growth. To the end of our forecast period in 2024, growth will slow averaging a healthy, but unspectacular 4.6% annually.

Key Trends And De velopments

  • The deterioration in EU-Russia relations is adversely affecting Latvia's economic growth outlook, although the full impact will not be seen until Q314 and Q414 data is released. Western sanctions on Russia have led to capital flight and a sharp depreciation of the rouble against the dollar, which has markedly worsened the growth outlook for Russia, which remains one of Latvia's most important trading partners. Real GDP growth in H114 arrived slightly higher than expected, at 2.5% y-o-y and we have revised up our 2014 growth estimate to 2.1% to account for this, from a previous forecast of 1.9%. However, we have also lowered our 2015 growth forecast to 2.2%, from 3.5% previously.

  • Latvia is a part of the 600-mile Rail Baltica project, a priority project (no.27) of the EU's TEN-T core network funding, linking Finland, Estonia, Latvia, Lithuania and Poland to the rest of the EU by a standard gauge, high speed line. Construction is under way on stage 1 from the Polish-Lithuanian border to Kanaus in Lithuania and is due to be completed in 2015. Stage 2 will extend the line from Riga in Latvia to...

Table of Contents

BMI Industry View
7
SWOT
9
Infrastructure SWOT
9
Industry Forecast
10
Construction And Infrastructure Forecast Scenario
10
Table: Construction And Infrastructure Industry Data (Latvia 2013-2018)
10
Table: Construction And Infrastructure Industry Data (Latvia 2019-2024)
11
Transport Infrastructure - Outlook And Overview
15
Table: Transport Infrastructure Industry Data (Latvia 2013-2018)
15
Table: Transport Infrastructure Industry Data (Latvia 2019-2024)
15
Transport Infrastructure Forecast Scenario
15
Table: Major Projects - Transport
20
Energy And Utilities Infrastructure - Outlook And Overview
21
Table: Energy And Utilities Infrastructure Data (Latvia 2013-2018)
21
Table: Energy And Utilities Infrastructure Data (Latvia 2019-2024)
21
Table: Major Projects - Energy And Utilities
24
Residential/Non-Residential Building - Outlook And Overview
25
Table: Residential And Non-Residential Building Industry Data (Latvia 2013-2018)
25
Table: Residential And Non-Residential Building Industry Data (Latvia 2019-2024)
25
Residential And Non-Residential Building
25
Industry Risk Reward Ratings
28
Latvia - Infrastructure Risk/Reward Index
28
Rewards
28
Risks
28
Central And Eastern Europe - Infrastructure Risk/Reward Index
30
Limited Access To Funding
34
Table: Central And Eastern Europe Risk Reward Index
35
Market Overview
36
Competitive Landscape
36
Company Profile
37
BMGS
37
Merko Ehitus
39
LEC
41
Global Infrastructure Overview
42
Global Industry Overview
42
Table: Construction Industry Value, Real Terms, % Change
43
Table: BMI's Top 5 Markets
47
Methodology
49
Industry Forecast Methodology
49
Sector-Specific Methodology
50
Risk/Reward Index Methodology
54
Sector-Specific Methodology
55
Table: Infrastructure Risk/Reward Index Indicators
55
Table: Weighting Of Indicators
56

The Latvia 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 Latvia Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Latvian infrastructure and construction industry.

Key Benefits

  • Benchmark BMI's independent infrastructure industry forecasts for Latvia to test other views - a key input for successful budgetary and planning in the Latvian infrastructure market.
  • Target business opportunities and risks in the Latvian infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Latvia.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity).

Coverage

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.

Market Overview

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.

Company Profiles*

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.

Sources

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.

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Testimonials

'An essential, multi-faceted research tool. BMI’s thorough understanding of the major market players enables an informed – and informative – review of the sector’s actual performance, together with useful insights into current industry issues, which are topped-off with detailed and invaluable forecasts of industry and macroeconomic trends.’

Senior Research Analyst, ABC International Bank plc