BMI View : We have revised up our 2015 forecast for Slovakia's construction industry to 9.7% on the back of historical revisions to the 2014 data, and stronger indicators across the industry. Low borrowing costs, improving demand conditions and strong business confidence should keep investment and credit growth at healthy levels, a particularly promising sign for the construction industry. Public-private Partnerships are likely to grow in prevalence and are set to support our forecasts over the coming years, especially in the road sector, in which we expect to see the strongest growth.
Key developments informing our forecast include:
Highways Projects B ack On Course
Our outlook for Slovakia's transport infrastructure sector has improved in 2015 thanks to the start-up of work on the much-delayed D1 highway, and to the approval of the EUR1.33bn D4-R7 expressway. We maintain that the EU's raft of transport network project funding announced in 2013 will benefit Slovak road and rail development/upgrading to better integrate with a European network. It should act as a driver for improved project handling, supported by a stable political outlook in Slovakia.
The transport infrastructure outlook received a large boost this year from the recent approval of the D4-R7 highway. The government granted approval to the EUR1.33bn (USD1.48bn) D4-R7 expressways public-private partnership project in January 2015. The 30-year project will involve building, maintaining and operating 27km of the D4 highway, the southern section of the Bratislava ring-road and 32km of the R7 expressway, part of the network connecting the west and east of the country.
EU G as Security In The Balance
The EU is driving for energy network integration and supply diversification, with a raft of funding pushing through several pipeline projects that should support Slovakia through reverse flow and bi-directional pipeline projects. After the completion of the Slovakia-Ukraine and Slovakia-Hungary bi-direction flow projects, the Poland-Slovakia pipeline is currently under study. Eastring is a proposed pipeline, a version of which is 832km, and runs across Slovakia, Hungary and Romania, while another version is 1274km long, and reaches Bulgaria. It will have a capacity of 20bn cubic metres per year (bcm/yr) at the first stage and 40bcm/yr at final stage, with total project cost of EUR2bn (USD2.2bn). The bi-directional pipeline could offer 20bcm/yr from end-2019 at the earliest.
Housing B oost
We expect positive growth for the residential and non-residential sector, with a progressive recovery underway following the global financial crisis and the sluggish recovery in the following years. Our core scenario envisages the Slovakian residential and non-residential construction segment value rising to EUR7.58bn (USD9.1bn) by 2025, making an impressive recovery from lows of EUR3.85bn reached in 2013. Low borrowing costs, improving demand conditions and strong business confidence should keep investment and credit growth at healthy levels, a particularly promising sign for the construction industry.
|f = BMI forecast. Source: Statistical Office of the Slovak Republic, BMI|
|Construction Industry Value, Real Growth, % y-o-y||9.70||4.80||3.50||2.90||2.30||1.10||0.80|
|Construction Industry Value, % of GDP||8.2||8.3||8.4||8.4||8.4||8.3||8.2|
|Construction industry value, EURbn||6.28||6.65||7.05||7.47||7.88||8.21||8.53|
Slovakia's infrastructure Risk/Reward Index (RRI) score has increased over the past year to 59.00 from a previous 54.45, on the back of increasing industry rewards as the macroeconomic picture improves providing a boost to the sector.
With an improved growth outlook, however, Slovakia's industry rewards scores significantly higher this quarter, at a 50.0 points, compared to its previous 40.0 score.
|Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
The Slovakia 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 Slovakia Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Slovak infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for Slovakia to test other views - a key input for successful budgetary and planning in the Slovak infrastructure market.
- Target business opportunities and risks in the Slovak infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Slovakia.
- 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.