BMI View: We expect the Ukrainian construction industry to suffer from an investment hangover, following a string of projects that have been carried out in preparation for Euro 2012. As such, after a 3.6% year-on-year (y-o-y) growth in construction industry value during 2012, we expect the industry to return to recession in 2013, with a 0.7% y-o-y contraction anticipated. The residential and non-residential construction sector, which accounted for almost 60% of total construction value in 2011 (according to BMI estimates), will prove to be a major disappointment over the coming years as renewed macroeconomic pressures, coupled with a lack of demand from businesses and foreign buyers, weaken the sector's recovery. As such, we forecast annual average real growth of just 1.5% between 2012 and 2021. However, our forecast for the infrastructure sector is more promising, with growth set to average 4.0% y-o-y over the same period, mainly on the back of the following factors: ???? Growth potential in the railways and ports sub-sectors will help the overall transport industry to maintain strong growth. In April 2012, President Viktor Yanukovych approved plans for the restructuring of Ukrainian Railways, in a move which will involve the electrification of some networks and increased participation of private operators. In total, we expect these projects to result in the transport industry posting annual average real growth of 3.3% between 2012 and 2016. ???? Ukraine's gas network needs an investment of US$3.2bn for modernisation, according to a study by Mott MacDonald in October 2011. In tandem, the possibility for Russia to purchase a stake in Ukrainian pipeline company Naftogaz (in return for lower gas prices) would see new investment into the sector. ???? The electricity sector is also seeing an influx of renewable power investments, with solar and wind doing especially well. Very attractive FiTs, especially in comparison to the rest of Europe, saw strong solar installations in 2011. We expect this to continue and to be complemented by investment into wind farms and, to a lesser degree, biomass. ???? The country's state privatisation programme, which will run to 2014, could generate revenues and precipitate investment. A privatisation law was signed in January 2012 and could see the government generate between UAH50bn (US$6.2bn) and UAH70bn (US$8.7bn) in revenues. This could be directed into much-needed infrastructure projects. However, lacklustre growth in the Ukrainian construction industry places the country at the bottom of our Central and Eastern Europe risk/reward ratings, with an overall score of 43.9.