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Home > Manufacturing > Fabrication > Building/Construction
Romania Infrastructure Report Q3 2009
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Despite the pressing macroeconomic problems the Romanian economy is facing, the country’sinfrastructure sector seems, for the time being, to have been able to escape the most pessimistic scenarios.Therefore, this quarter, BMI has once again revised its forecasts. In BMI’s Romania InfrastructureReport Q309, we forecast that the construction, and by extension infrastructure, sector of Romania willcontract by 3.2% y-o-y in 2009, contrary to our previous forecast of -14.8%. The construction industry isnow estimated to be worth approximately US$16bn in 2009, contrary to our previous estimate ofUS$14bn, which, however, still marks a significant loss when compared with 2008’s worth ofUS$19.2bn. We expect positive growth to resume in 2010, but still at a much slower pace than inprevious years.
As we mentioned last quarter, the Romanian government is paying special attention to the infrastructuresector, and is determined to sustain public investments. This is reflected in the significant number of newcontracts, particularly in the transport sector and the sustained efforts to keep the momentum going in thePPP market.
Nevertheless, this quarter, Romania’s infrastructure score in our Business Environment Ratings has onceagain dropped, from 60 to 50, dragging down the country’s overall score. This is mainly due to poorconstruction expenditure and sector growth scores, while Romania’s country risk score has also declinedthis quarter. In our Project Finance Ratings, Romania’s low inflation, long-term currency volatility andcorruption scores mean that Romania ranks 12th out of the 16 Central and Eastern European countriesrated.
Our overall view for Romania calls for vigilance, with the risks to our forecasts largely to the downside.Our macroeconomic outlook for the country is also pessimistic. For 2009, we forecast that real GDPgrowth rate will fall to -4.2% y-o-y, while we expect unemployment to rise to 8.1%. We forecast that theeconomy will begin to recover in 2011, with growth projected to average 2.5% through the remainder ofour five-year forecast period.
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