2013-12-12 17:27:09 - Fast Market Research recommends "Ecuador Infrastructure Report Q1 2014" from Business Monitor International, now available
As anticipated, after two years of double-digit growth in 2011 and 2012, a slowdown is on the cards for Ecuador's construction sector. Having expanded by 7.8% in Q113, we predict that real industry growth in 2013 will come in at a more modest 6.8% followed by 5.5% in 2014. This decelerating trend is likely to continue over the medium term, with BMI forecasting average annual growth of around 3.7% between 2014 and 2018. We believe that a drop-off in government spending as a result of weakening oil revenues and a deteriorating consumer outlook are likely to put the brakes on infrastructure investment and residential construction respectively. Meanwhile, Ecuador's persistently weak business environment and prohibitive financing conditions will continue to starve
the sector of much-needed investment.
We believe that a drop-off in government spending following February 2013 general election and a weakening consumer outlook are likely to put the brakes on infrastructure investment and residential construction respectively. Meanwhile, Ecuador's persistently weak business environment and prohibitive financing conditions will continue to starve the sector of much-needed investment over the medium term.
Full Report Details at
- www.fastmr.com/prod/723565_ecuador_infrastructure_report_q1_2014 ..
Key developments in the industry:
* Following re-election, we believe President Correa's populist agenda will accelerate throughout his next four-year term. While this poses some upside risk to our forecasts given the focus on social and economic infrastructure investment, we believe chronic financing difficulties will see the government struggle to maintain its ambitious levels of spending.
* In July 2013, the World Bank - through the International Bank for Reconstruction and Development (IBRD) - authorised a US$205mn loan for the construction of the Quito metro system. The project, scheduled to be operational in 2016, will also rely on loans from the Andean Development Corporation (US$250mn), the Inter-American Development Bank (US$200mn) and the European Investment Bank (US$262mn).
* In August 2013, the government agreed to reopen talks with foreign investors over the possibility of a deepwater terminal in the town of Posorja. Spanish group Alianza Internacional Portuaria (Alinport) secured a concession worth US$450mn in 2006 to build and operate a deepwater port with a 15m draft in Posorja, but the work never began and the construction authorisation was later revoked. Furthermore, Ecuador's transport and public works ministry received a letter from the Ecuadorean company Nobis, which is a shareholder in Alinport, claiming that new foreign investors are interested in the opportunity.
* Furthermore, Ecuador has taken the first step towards developing the controversial Ishpingo-Tambococha-Tiputini Block by approving drilling on the 850mn barrel area which represents a considerable upside to our forecast. Production estimates for the field range up to 190,000b/d, which if achieved would boost production in the country by almost 40%. It is estimated that US$3bn would be needed to the initial phases of bringing the field into production.
While a number of factors have boosted prospects for Ecuador's construction industry over the medium term, weaknesses within the country's business environment will continue to present risks and cap growth. Chief among these will be financing. Ecuador's growth trajectory still remains heavily dependent on oil prices, which is concerning, especially given the uncertain global growth outlook. Meanwhile, political risk will continue to provide cause for concern for investors in the country, with anti-democratic nuances and populist policies at odds with attracting international investment in infrastructure.
Report Table of Contents:
BMI Industry View
- Construction And Infrastructure Forecast Scenario
- Table: Ecuador Construction And Infrastructure Industry Data, 2011-2016
- Table: Ecuador Construction And Infrastructure Industry Data Long-Term Forecasts, 2017-2022
- Transport Infrastructure - Outlook And Overview
- Table: Competitiveness Of Ecuador's Infrastructure
- Major Projects Table - Transport
- Table: Major Projects - Transport
- Energy And Utilities Infrastructure - Outlook And Overview
- Major Projects Table - Energy & Utilities
- Table: Major Projects - Energy And Utilities
- Residential/Non-Residential Building - Outlook And Overview
- Major Projects Table - Residential/Non-Residential Construction
- Table: Major Projects Table: Residential/Non-Residential Construction
Industry Risk Reward Ratings
- Ecuador - Infrastructure Risk/Reward Ratings
- Latin America - Infrastructure Risk/Reward Ratings
- Populist Policies Perturb Investors
- Table: Latin America Infrastructure Risk/Reward Ratings
- Competitive Landscape
- Table: EQS Data
- Isolux Corsan
- Semaica, Sevilla y Martinez
Global Industry Overview
- Table: Latin America PPP Round-Up
- Industry Forecast Methodology
- Sector Specific Methodology
- Risk Reward Rating Methodology
- Sector Specific Methodology
- Table: Infrastructure Risk Reward Rating Indicators
- Table: Weighting Of Indicators
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