2013-08-22 09:10:23 - New Construction research report from Business Monitor International is now available from Fast Market Research
After official data was released it has come to light that Germany's construction sector has continued to struggle as eurozone worries impede growth. Our revised forecast for growth of -1.9% in 2013 was below our expectations, but nonetheless in line with our view that the sector will underperform. 2014 should see a return to growth, which will be the trend for the 10-year forecast period to 2022. Average growth between 2013 and 2022 will be 1%, indicating that confidence from investors in the sector will remain weak. Industry value will reach US$143.5bn in 2013, rising to US$169.1bn by 2022.
Key developments in the sector are:
* The air transport sub-sector will see growth slow to an annual average of just 1.3%
between 2014 and 2022.We are seeing growth slow due to a number of large projects coming into their final stages, including the expansion of Frankfurt International to include a third terminal, which is owned by Fraport, and the much delayed new Berlin airport. One major project in this sub-sector is the EUR1bn expansion of Munich International Airport, which is the second largest airport in Germany. The expansion includes the construction of a third runway, and the project will allow Munich to land 120 planes per hour, up from 90, expanding annual passenger capacity to 58mn. Plans should see work continue to 2025, with the new runway planned for completion by 2015.
* The Stuttgart 21 project has the potential to boost Germany's rail infrastructure sector and presents a significant upside risk to our railways forecasts - that is if the project is not cancelled or significantly reduced in scope. The new station and urban redevelopment project originally had a price tag of EUR2.6bn (US$3.3bn), but it has since ballooned to around EUR4.1bn (US$5.4bn) - costs that will be jointly borne by Deutsche Bahn, Stuttgart's airport and federal, state and city governments. The associated high-speed rail line to Ulm has an estimated cost of EUR3bn. Construction began in February 2010. Officially, Deutsche Bahn says the project will be completed by 2020, but Stuttgart 21 has already been plagued with delays and Transportation Ministry officials in Berlin are estimating that it will not be finished until 2024.
* Germany's energy and utilities sector will continue to provide growth within the infrastructure industry over the coming years, in part due to a dearth of projects in the transport sector, but also as a consequence of Germany's continued drive for renewables and the country's decision to phase out its nuclear power generation. The sector is forecast to rise from 41.7% of total infrastructure in 2013 to 44.9% by 2022. This represents a rise from US$16.9bn in 2013 to US$22.0bn by 2022. Within the energy and utilities infrastructure industry, power plants and transmission grids dominate. The decision to permanently phase out all nuclear power by 2022 is set to have a major impact on the country's power sector, but will reinforce the need to meet the aim of ensuring renewables account for 35% of total generation by 2020 and 80% by 2050.
Full Report Details at
- www.fastmr.com/prod/670559_germany_infrastructure_report_q3_2013 ..
A grand coalition between Germany's centre-right Christian Democrats (CDU-CSU) and the centre-left Social Democratic Party (SPD) remains the most likely outcome following the September 2013 general election. Under such a government we would expect slightly less focus on fiscal austerity both at home and for periphery eurozone states, which would be net positive for domestic demand and the future of the single currency. BMI's Country Risk team has adjusted down our 2013 real GDP growth forecast for Germany from 0.8% to 0.5%, as first quarter data show business confidence was hit harder than expected by several negative shocks early in the year - including the Italian elections, the Cypriot bank bailout and poor weather conditions. With the country experiencing another bout of extreme weather at the time of writing, we do not expect Q213 to post any notable recovery in growth, although we still believe that the outlook is more promising for the second half of the year.
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