BMI View: A change of government in late 2015 has not substantially altered our positive outlook for Romania's construction sector going forward. Demand in the residential sector continues to grow, driven by rising household income rates and falling unemployment, as well as short-term tax cuts. In the transport sector, major funding from the European Union is supporting development of road and rail connections, though we note airports remain neglected. The outlook in the power sector is more subdued, with high-profile nuclear power projects subject to ongoing delays. While expanding public spending will support growth through to 2020, over the remainder of the forecast period, growth will be more subdued as foreign funding declines.
Latest Updates A nd Structural Trends
Romania is proving increasingly attractive to foreign investors. Foreign direct investment (FDI) into the country increased by nearly EUR1.2bn (USD1.3bn) in the first 10 months of 2015 to reach EUR2.8bn (USD3.0bn), according to data released by Banca Nationala a Romaniei.
Government spending is expected to remain one of the key drivers of growth over 2016 and 2017 and we do not expect the formation of a new technocrat government in late 2015 to detail the positive growth trajectory, with GDP anticipated to grow by 3.6% in 2016 and by 3.7% in 2017.
This growth supports our forecasts for construction industry value growth of 7.0% in 2016 and 5.6% in 2017, though as public spending comes under greater pressure over the medium term, we expect growth to slow to low single digits.
|e/f = BMI estimate/forecast. Source: National Institute of Statistics, BMI|
|Construction industry value, RONbn||44.49||47.60||51.11||54.69||58.59||63.22||67.30|
|Construction Industry Value, Real Growth, % y-o-y||6.10||7.00||5.62||3.50||2.38||2.90||1.46|
|Construction Industry Value, % of GDP||6.8||6.9||7.1||7.1||7.0||7.0||6.8|
Romania's score on the Infrastructure Risk/Reward Index declined slightly this quarter, to 54.3 out of 100 compared to 55 last quarter.
Romania's score for Industry Rewards is 52.5 out of 100 this quarter as the overall market remains small, despite EU funding.
Its Industry Risks score is once again 40 out of 100, as foreign investors have been discouraged by corruption (eg the ongoing corruption scandal related to former Prime Minister Victor Ponta), political uncertainty and a lack of transparency.
|Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
The Romania 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 Romania Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Romanian infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for Romania to test other views - a key input for successful budgetary and planning in the Romanian infrastructure market.
- Target business opportunities and risks in the Romanian infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Romania.
- 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.