2014-01-23 17:35:34 - Recently published research from Business Monitor International, "Slovenia Infrastructure Report 2014", is now available at Fast Market Research
We remain bearish on the outlook for the Slovenian construction industry, premised on the poor outlook for the broader economy. Although we were over pessimistic at -7.7% year-on-year (y-o-y) growth in 2012, which came in at -6.8% according to official statistics, our bearish view played out. In light of very little activity in the infrastructure sector, and poor outlooks for personal consumption and fixed investments, we forecast that the industry will contract in 2013 by 4.6% and 0.5% in 2014. Tightness in the banking sector, even after recapitalisation in December in 2013, and deepening cuts will diminish scope for investment in construction projects in the medium term. Consequentially, we forecast the Slovenian construction industry value to reach EUR2.53bn (US$3.04bn) through
the forecast period, growing by a modest average of 2.4% y-o-y (in real terms) between 2015 and 2023.
Full Report Details at
- www.fastmr.com/prod/764001_slovenia_infrastructure_report_2014.a ..
The cautious growth in the construction industry will mainly be driven by growth in infrastructure subsector as residential and non-residential building segment is likely to remain depressed. The infrastructure accounted for just over 43% of the total construction industry value during 2011, with the transport infrastructure being considerably ahead of energy in terms of value. Transport is set to increase by a real growth rate of 1.85% y-o-y on average between 2013 and 2021, mostly driven by the developments in the port and airport sub-segments. We also expect energy and utilities to grow by a similar magnitude, primarily on the back the government's commitment to a mix of thermal, nuclear and renewable energy development.
Following are the key areas of growth in the infrastructure sector:
* Rejuvenating The Transport Sector: The Slovenian port of Koper continues to drive forward its plan to develop into a maritime gateway for Central and Eastern Europe. Port operator International Container Terminal Services Inc (ICTSI) is looking to make the port more attractive to shipping lines, in a project expected cost around EUR15.7mn and be concluded by the end of April 2015. Meanwhile, Aerodrom Ljubljana plans to spend EUR70mn (US$94mn) on constructing a new terminal at its Ljubljana Joze Pucnik Airport in Slovenia. Work is part of a EUR115mn (US$154mn) airport rejuvenation project which will see a new logistics centre open in 2013, with a cargo terminal following in 2015.
* Rushing For New Energy: A new generator at the Sostanj coal-fired power plant and a second reactor at the Krsko Nuclear Power Plant are likely to be the key driver of growth in the Slovenian energy subsegment in the near future. Slovenia plans to build a new 600 MW unit for the Sostanj lignite power plant (TES6) which would replace the power plant's existing units 1-4 and possibly 5. There are plans to construct a second reactor at Krsko in a project estimated to cost between EUR3.5bn and EUR5bn. Industry participants have however stressed the need for a concrete energy policy without which the development of the energy sector could be hampered.
However, prospects look less bright for the residential and non-residential sub-sectors. Growth in the residential sector is being dampened by the massive stock of unsold and empty dwellings in the market, which is discouraging new investments in the sub-segment. Meanwhile, demand for dwellings is struggling to pick up with unemployment exceeding 8% and as the banking crisis in Slovenia is making mortgages difficult to get approved.
This overall pessimistic outlook has resulted in Slovenia being overtaken by Estonia and pushed from its second position previously to the third in BMI's Risk/Reward Ratings for Central and Eastern Europe.
Report Table of Contents:
The table of contents for this report is available upon request.
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