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Hungary Infrastructure Report Q1 2013 - New Market Research Report

New Construction market report from Business Monitor International: "Hungary Infrastructure Report Q1 2013"


Boston, MA -- (SBWIRE) -- 01/10/2013 -- BMI View: Despite encouraging signs during the first two quarters of 2012, our outlook for the Hungarian construction industry value has changed for the worse as we now forecast year-on-year (y-oy) contraction in the sector to continue until 2013. Key factors that have shaped this outlook include a weaker economic outlook, the failure of the government to reach an external financing arrangement with the IMF/EU and the over-burdened private household sector. We expect the market to return to positive growth territory from 2014, but any growth during our 10-year forecast period will be minimal and mostly owing to investments in infrastructure projects.

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The most recent data released by the Hungarian Central Statistics Office (KSH) shows that the Hungarian economy officially entered recessionary territory in the second quarter of 2012, having contracted by 0.7% y-o-y and 1.3% y-o-y respectively during Q112 and Q212. However, the construction sector as a whole is expected to bottom out in 2013, driven by growth in the infrastructure sector, where a couple of notable projects should be enough to create growth. On the other hand, the residential and non-residential sector is expected to post another year of contraction (-18.9%), with the residential sector continuing to suffer weakness. Boosted by a slew of EU co-financed projects, the infrastructure segment will increase its contribution to the construction industry value to 51.7% by the end of our 10-year forecast period in 2021, compared with its estimated share of 46.4% in 2011.

Sectors that show particularly strong potential are:

?? The Rail-Road Boost: The biggest growth opportunity for the country's transport infrastructure is the support given by the EU to drive the modernisation of Hungary's road and rail links and improve freight transport throughout the country. We expect growth in the railways sub-sector to outpace growth in the overall transport segment. In April 2012, Thales Austria received a HUF5.1bn contract for the design and implementation of the European Train Control System (ETCS) on the Bajansenye-Boba railway section by September 30 2014. The project is said to be mostly financed by the EU, indicating that the railways could be made a priority if the funding continues. ?? Pipeline Projects: A number of international natural gas pipelines passing through the country have the potential to bring substantial investment in the Hungarian energy and utilities segment. In addition to various pipeline projects with its neighbours, Hungary has joined four other countries in the region to sign an intergovernmental agreement that apportions gas flowing through the planned Nabucco pipeline from Central Asia. Although the project has been impeded by significant delays and cost concerns, Bulgarian Prime Minister Boyko Borisov revealed that he expects the construction of the Nabucco pipeline to begin in January 2013 and be operational by 2017.

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