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Ukraine Infrastructure Report Q1 2014 - New Market Study Published

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2013-12-29 18:30:37 - New Construction market report from Business Monitor International: "Ukraine Infrastructure Report Q1 2014"

Our outlook for the Ukrainian construction sector has changed for the worse, as we have substantially downgraded our forecast for the construction industry value from a moderate 1.8% y-o-y real contraction expected earlier to a more painful 14.6% y-o-y real contraction during 2013. Although we expect the sector to return to positive growth territory from 2104, there is little likelihood that the market will be able to return to 2007 levels anytime during the forecast period to 2022. We believe growth in the infrastructure and the residential and non-residential construction sub-segments will remain constrained owing to weak government finances, highly cautious private segment spending and a difficult and uncertain operating environment.

Estimates from the Ukrainian statistical office suggest that following a

14.8% y-o-y contraction in output during Q113, the construction sector posted a 20.9% y-o-y decline in Q213. Indices for construction sector activity point towards weaknesses in both the infrastructure sub-sector as well as in the residential and non-residential sub-sector. The index for the building segment stood at 89.1 between January and September 2013, while that for civil engineering reached 79.4 during the same period.

Full Report Details at
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However, after modest growth between 2014 and 2017, growth could accelerate to 3% in 2018 mostly helped by a number of small projects, such as wind farms, port expansion and rail electrification, currently planned. The following are the key developments that support our view:

* Growth potential in the railways and airports sub-sectors will help the overall transport industry to maintain strong growth. An indicator of the railways' importance is the September 2013 announcement that Ukrainian Railways is expecting legislative reforms, mainly designed to attract private investment into the sector. The new legal framework is likely to compensate private investors for funding the development of Ukraine's public railways. Back in January 2013 Prime Minister Nikolay Azarov had revealed that the country would start construction of high-speed railways by the end of the year. Plans are also underway to modernise local rolling stock.
* In March 2013 Azarov announced plans to spend UAH7.2bn on road construction and repair during the year, which was expected to bring some much-required investment into the sub-sector. Vice Prime Minister Oleksandr Vilkul revealed that the investment was a part of a broader plan involving the renovation of over 9,000km of roads over the next two years.
* The renewable energy segment is gaining funding support from both private investors and international financial institutions. In September 2013, the EBRD extended more support to Ukraine's solar power projects by offering a EUR5.4 financial package to Teplodar PiVi for the development, construction and operation of a 4.2 MW solar power plant in the Odessa region. In fact, EBRD has become the largest financial investor in Ukraine, investing a total of EUR8.55bn in 327 solar projects across the country.

Despite this, our weak short- and medium-term outlook for the construction sector continues to drag Ukraine down to the bottom end of our Central and Eastern Europe Risk/Reward Ratings (RRRs). In fact, its score has deteriorated further from 45.1 points last quarter to 40.5 this quarter. The country is below the regional average for all indicators with a particularly weak and falling Industry Rewards score. For Ukraine to improve its score, private investment in particular needs to be increased, as a large rise in government expenditure would not be advisable, as it might lead to a growing fiscal deficit given Ukraine's relatively low rates of tax.

Report Table of Contents:

BMI Industry View
- Infrastructure SWOT
Industry Forecast
- Construction And Infrastructure Forecast Scenario
- Table: Ukraine's Construction And Infrastructure Industry Data And Forecasts, 2011-2016
- Table: Ukraine's Construction And Infrastructure Industry Long-Term Forecasts, 2017-2021
- Transport Infrastructure - Outlook And Overview
- Table: Ukraine's Transport Infrastructure Industry Data And Forecasts, 2011-2016
- Table: Ukraine's Transport Infrastructure Long-Term Forecasts, 2017-2022
- Table: Major Projects - Transport
- Energy And Utilities Infrastructure - Outlook And Overview
- Table: Ukraine's Energy And Utilities Infrastructure Industry Data And Forecasts, 2011-2016
- Table: Ukraine's Energy And Utilities Infrastructure Industry Data And Forecasts, 2011-2016
- Table: Major Projects - Energy And Utilities
- Residential And Non-Residential Building - Outlook And Overview
- Table: Ukraine's Residential And Non-Residential Building Industry Data And Forecasts, 2011-2016
- Table: Ukraine's Residential And Non-Residential Building Industry Data And Forecasts, 2017-2022
- Table: Major Projects - Residential/Non-Residential Construction And Social Infrastructure
Industry Risk Reward Ratings
- Ukraine - Infrastructure Risk/Reward Ratings
- Central And Eastern Europe - Infrastructure Risk/Reward Ratings
- Table: Central And Eastern Europe Risk/Reward Ratings
Market Overview
- Competitive Landscape
- Table: EQS Industry Data
Company Profile
- Aerobud
- Altis-Holding Corporation
Global Infrastructure Overview
- 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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