Boston, MA -- (SBWIRE) -- 06/02/2012 -- BMI View: A worsening outlook for the French economy has resulted in BMI downgrading its forecast for the country's construction industry value from growth of 1.2% year-on-year (y-o-y) last quarter to a modest 0.8%. However, our view that the infrastructure sector will outperform the residential and nonresidential construction segment in terms of growth over our forecast period to 2021 remains intact.
We expect the infrastructure sector to grow by an average of 5.1% y-o-y between 2012 and 2016, helped by the EUR25bn in transport public-private partnerships (PPPs) and concessions, which are in the final planning/tendering stages, and another EUR32bn in projects, which are due to be launched between 2012 and 2020. Transport projects will contribute to 83.2% of all infrastructure by 2016 (up from the 79% estimated for 2011), as the segment grows by an annual average of 6.2% to EUR50.2bn by the end of this period. The energy and utilities sector is forecast to reach EUR8.1bn in value in 2016- making up nearly 17% of the country's total infrastructure.
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The key factors driving this trend are:
- Three high-speed lines (LGV Sud Europe Atlantique, Contournement Nimes-Montpellier (CNM) and Bretagne-Pays dela Loire), costing a total of EUR29bn, will be a key thrust behind value creation for the French infrastructure sector. There is positive news on the progress of the projects, with the RFF announcing the award of the Contournment Nimes-Montpellier (CNM) high-speed railway line to a consortium led by Bouygues in January 2012.
- Large-scale projects planned in nuclear power and the investment in overhauling and expanding the country's power grid will support growth in the energy and utilities infrastructure sector. Industry participants are already gearing up to tap the growth opportunity, with French utility company EDF announcing plans to allocate the majority of its approximately EUR12.5bn (US$16.47bn) investment towards nuclear power projects during 2012. Meanwhile, European utilities have begun to position themselves in preparation for a bidding war for France's lucrative hydropower contracts, which are expected in 2012.
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