BMI View : Despite lingering macroeconomic headwinds, Russia ' s expected economic improvement in 2017 is set to catalyse a broad-based , modest return to growth in the country ' s wider construction sector. An improving consumer outlook will serve to buoy investment in the residential sector , while construction associated with the 2018 World Cup will drive higher growth rates in the Russia ' s transport and non-residential segments.
Latest Updates And Structural Trends
We expect Russia's broader construction sector to expand 2.8% in 2017, driven by increased construction activity stimulated by rising government expenditure, moderating inflation and GDP growth of 1.5%.
We maintain our expectation that international sanctions are likely to be eased in 2017. However, we view sanctions relief as more likely to occur towards the tail-end of 2017 (with an outside possibility of an early 2018 easing), as mounting pressure in the EU overcomes tensions unleashed by Russia's Syria campaign in late 2016.
Russia's residential and non-residential segment will be the biggest beneficiary of the country's brightening economic outlook, with the sector emerging from a multi-year period of growth contraction to average an estimated growth rate of 2.8% over 2017.
|e/f = BMI estimate/forecast. Source: BMI/Goskomstat|
|Construction industry value, RUBbn||3,957.20||4,037.50||4,397.90||4,834.40||5,182.50||5,651.70||6,148.90||6,658.80||7,260.60||7,916.60||8,631.70|
|Construction Industry Value, Real Growth, % y-o-y||-15.80||-5.50||2.80||4.50||2.10||4.10||4.00||4.00||5.00||5.00||5.00|
|Construction Industry Value, % of GDP||4.9||4.6||4.7||4.8||4.8||5.0||5.1||5.2||5.4||5.6||5.8|
Russia's overall score rises 1.1 to 53.4 in Q117, below the regional average of 54.8 and placing it 12 th out of 18 countries. The uptick is driven by a 2.5 increase in the country's Infrastructure Rewards score, which reflects our more positive construction sector growth forecast for 2017.
Russia's Country Risk score holds fast at 62.2 in Q117 on the back of heightened policy continuity. More broadly, however, Russia's risks in this pillar remain firmly to the downside - the country continues to be plagued by pervasive corruption, a weak institutional framework, and relatively high levels of external risk, stemming from the country's involvement in Syria and in eastern Ukraine.
The deleterious effects of international sanctions and the continued inability of state-owned Russian entities to effectively raise capital on the global financial markets cements Russia's underperformance in the Country Rewards pillar. Russia's Q117 score in this respect remains 62.8, significantly below the regional average of 71.1 and placing the country 16th out of 18 countries.
|Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
The Russia 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 Russia Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Russian infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for Russia to test other views - a key input for successful budgetary and planning in the Russian infrastructure market.
- Target business opportunities and risks in the Russian infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Russia.
- 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.