Boston, MA -- (ReleaseWire) -- 04/14/2014 -- The Greek construction industry experienced yet another year of contraction in 2013 and we do not expect a tentative recovery before 2017. Throughout 2014 the downturn will be evident in both the housing and infrastructure segments, as reduced spending on planned projects and diminished demand from the private sector (owing to higher property taxes, tight credit and rising unemployment) discourage investors from returning to the market. We see little scope for a quick rebound in the construction industry during our 10-year forecast period to 2023.
Key Areas Offering Growth Potential
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Transport Infrastructure: In August 2012, Greek development minister Kostis Hatzidakis announced that the government would increase its focus on new transport infrastructure projects to boost development in the recession-plagued economy. However, the projects are constantly being delayed and we do not see any of these to be completed soon. Key transport projects include: the completion of a metro network in the northern city of Thessaloniki, expansion of the suburban rail network and the regional ports of Patras, Igoumenitsa and Lavrion. In addition, most recently (mid-2013) Hatzidakis announced that long-awaited extensions to four major motorways (Olympia Odos, Aegean Motorway, Kentriki Odos and Ionia Odos), which have been frozen for years, will be re-started. European funds will continue to be crucial to the country's infrastructure sector, as public sector funding continues to be constrained by austerity measures, which is subsequently making private investors wary of the market. In a move indicative of this trend, the European Investment Bank has offered Greece EUR550mn to fund a number of infrastructure projects.
Renewable Energy: As part of the EU, Greece has committed to the European Commission's 20-20-20 goals for 18% of energy for final consumption to be from renewable sources by 2020. However, the country has also committed to reaching 20% of energy from renewable sources by 2020, under the Implemented Directive 2009/28/EC (EEL, 140/2009). Greece's government is keen on making the country Europe's solar energy powerhouse, with up to EUR20bn being invested over our 10-year forecast period to 2022.
However, reflecting the wider European trend of cuts in feed-in-tariffs (FiTs) and scaling back on renewables, especially the solar PV sector, our Renewables team sees that the Greek government will revise down FITs in 2013. As per our expectations, the government has proposed a reduction in FiTs for solar PVs, from 45% to 35%. This is part of the wider 'new deal' legal framework that the Ministry of Energy and Climate Change submitted for consultation in September 2013 and which seeks to streamline, rationalise and balance the renewable market in Greece. The immediate objective is to eliminate the deficit of the operator of the electricity market, LAGIE.
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