Boston, MA -- (ReleaseWire) -- 02/12/2014 -- We believe the current weakness in Poland's construction sector will persist over 2014 as the road building debacle continues to weigh on productivity, capacity and investor sentiment. However, we are anticipating a recovery from 2015 as a new allocation of EU funding, as well as government measures to support the housing sector will provide a shot in the arm for the construction sector. As such, we anticipate annual average growth of 5% between 2015 and 2018.
Poland's construction sector experienced an estimated 10.1% contraction in 2013, wiping close to US$2.5bn off the total industry value, whilst more than 300 companies in the industry faced bankruptcy - including some of the country's largest builders. The impact of this is expected to persist into 2014, with reduced capacity, productivity and weakened investor sentiment indicating sustained weakness in the industry, and guiding our forecast for 0.5% real growth for the year.
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However, over the course of 2014 we expect sentiment to recover, and thus provide momentum for growth in 2015. This will be driven by government housing policies, as well as the EU 2014-2020 Multiannual Financial Framework. Poland will once again be the biggest beneficiary of EU funding, and much of this will be targeted to infrastructure - to bring Poland's quality of infrastructure in line with developed EU countries, as well as better integrate Central and Eastern Europe.
Key developments within the sector:
- Poland will receive up to EUR105.8bn under the EU's 2014-2020 Multiannual Financial Framework - this will include EUR72.9bn for Cohesion Policy. In line with EU goals to boost interconnectivity, and promote energy security, we anticipate that funding will be directed predominantly to rail and road projects in the transport sector, and clean energy, transmission and distribution, and natural gas supply and transport infrastructure.
- We could see some threats to Poland's currently attractive wind power sector, following government statements in November 2013 that it is seeking to reduce to the cost of renewable energy supplies by 40% in 2014. Plans include cuts to subsidies and fixed price contracts. Similar moves elsewhere in the region have been damaging to investment.
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