Latvia Infrastructure Report 2015 - New Market Report

From: Fast Market Research, Inc.
Published: Thu Dec 25 2014

On the back of deteriorating relations between the EU and Russia over the Ukraine crisis, we have downgraded our 2015 forecast due to low confidence and poor economic performance limiting investment. Having said that, 2014 was the third consecutive year of double-digit growth in the construction industry, as it rebounds from a deep recession. EU transport and energy network funding will be a driver of growth to 2024, while housing and office demand will continue its strong sustainable recovery.

We estimate strong 2014 construction industry growth of 13.4% year-on-year (y-o-y) to EUR1.47bn (USD2.0bn), before moderating to a 5.4% increase and EUR1.56bn (USD2.0bn) in 2015. 2016 and 2017 will average 6% annual growth. To the end of our forecast period in 2024, growth will slow averaging a healthy, but unspectacular 4.6% annually.

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Key Trends And De velopments

* The deterioration in EU-Russia relations is adversely affecting Latvia's economic growth outlook, although the full impact will not be seen until Q314 and Q414 data is released. Western sanctions on Russia have led to capital flight and a sharp depreciation of the rouble against the dollar, which has markedly worsened the growth outlook for Russia, which remains one of Latvia's most important trading partners. Real GDP growth in H114 arrived slightly higher than expected, at 2.5% y-o-y and we have revised up our 2014 growth estimate to 2.1% to account for this, from a previous forecast of 1.9%. However, we have also lowered our 2015 growth forecast to 2.2%, from 3.5% previously.
* Latvia is a part of the 600-mile Rail Baltica project, a priority project (no.27) of the EU's TEN-T core network funding, linking Finland, Estonia, Latvia, Lithuania and Poland to the rest of the EU by a standard gauge, high speed line. Construction is under way on stage 1 from the Polish-Lithuanian border to Kanaus in Lithuania and is due to be completed in 2015. Stage 2 will extend the line from Riga in Latvia to...

The Latvia Infrastructure Report features Business Monitor International (BMI)'s market assessment and forecasts covering public procurement and spending on all major infrastructure and construction projects, including transportation and logistics by land, sea and air; power plants and utilities, and commercial construction and property development. The report analyses the impact of regulatory changes and the macroeconomic outlook and features competitive intelligence on contractors and suppliers.

BMI's Latvia Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Latvian infrastructure and construction industry.

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