Boston, MA -- (ReleaseWire) -- 02/17/2014 -- Fixed investment levels remained weak over 2013, which moderated our outlook for the construction industry sector (0.5% real growth). However, with recovery on the cards for Romania's economy and continued support from multilateral institutions, we should begin to see growth in the construction sector improve over 2014 and beyond. Economic uncertainty has held back the residential and non-residential construction sector, but with exports improving and a potential cut to interest rates, the sector will begin to make up the ground lost to the infrastructure sector, which has driven growth over recent years owing to help from European sources.
- Romania's Green Credentials Slip: Previously one of the most attractive renewable markets in the region, Romania's suspended tariffs for the sector in July. While still a growing market, particularly for wind projects, the investment environment for the industry has taken a hit and will therefore be less of a driver of growth in the construction industry.
- PPPs To Improve: A new Public Private Partnership law was passed in October 2013, which aims to fix the old PPP (law approved in 2010). The bill follows the French model and was designed with assistance from the EBRD and the World Bank (WB). According to the new bill, authorities will set up a special division in the Ministry of Finance to assess projects with assistance from the European Commission (EC).
- Progress on Roads: Two final bidders remained in the race for the 58km Comarnic-Brasov motorway concession; a consortium of Vinci, Strabag and Aktor Concession; and the recently merged Salini and Impregilo. In December 2013 it was announced the Strabag consortium had one the contract and should complete the road by 2017. The Sebes-Turda highway, part of the Pan-European transport corridor IV which starts in Germany and goes through Prague, Wien, Bratislava and Budapest, is expected to be awarded in 2014.
- Residential and Non-residential construction continues to struggle: Unlike the infrastructure sectors, the residential and non-residential sectors are susceptible to the financial position of individuals and companies. Individuals and companies have not been investing their money in new property as job security and struggling export markets have weighed heavy. With fixed investment forecasted to remain subdued, we are forecasting a real growth rate of just 0.4% in 2014. We note however that an improving economic picture in Romania should begin to increase the confidence needed for big capital outlays such as new houses or offices. Over the 2015-2023 period, the sector will average 2.8% y-o-y growth per annum.
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