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France Infrastructure Report Q4 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: October 2009 Product Code: R302-8234 Description We have revised our forecasts to a more bearish scenario this quarter. We now predict that France’sconstruction sector will contract in real terms by 8.5% in 2009, compared with our earlier expectation thatit would contract by 5.5% in real terms. This revision is on the back of a downward revision to growthforecasts for the wider economy by our macroeconomic team. We now expect fixed investment across theFrench economy as a whole to contract by 7.7% this year, with a further 1.6% contraction in store for2010. As such, although the French government is ‘priming the fiscal pump’ by carrying out significantspending, anaemic private sector investment is more than offsetting this positive state stimulus. Weanticipate that the construction sector will contract again in 2010, by 0.8% in real terms. It will thereforebe 2011 before the sector resumes a positive growth trajectory, at a rate of 4.6% in real terms, beforeseeing real growth of 4.8% in 2012.The primary risk to a recovery beyond 2010 is a 'double-dip’ recession in which an economic bounce isnegated by tighter monetary and fiscal policy and/or higher commodity prices, which in turn triggers asecond down leg. This may be playing out, given the recovery in asset prices since March, and thepotential for interest rates being raised by the European Central Bank next year. However, there are also upside risks to our forecasts, particularly for 2010. If the French economystrengthens at a more rapid rate than is currently anticipated by our macroeconomic team then privatesectorled construction activity should help to ensure positive sector growth next year, in real terms. French infrastructure companies have, on the whole, performed reasonably well in the first months of2009. The Bouygues Group generated a net profit of EUR159mn in Q109. Bouygues Constructiongenerated a net profit of EUR48mn in Q109. Lafarge’s Q209 net profit registered EUR387mn. And EDFGroup generated a net profit of EUR3.117bn in H109, up from EUR3.116bn in H108. Table of Contents
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