Boston, MA -- (SBWIRE) -- 01/07/2014 -- We have recently revised up our forecast for construction industry real growth in Colombia from 5.5% to 8.35% for 2013. This is underpinned by an official revision to industry growth in 2012, which was previously believed to have been 3.28%, but is now reported by Colombia's central bank to have been 6.3%. In addition, the industry reported strong growth of 9.89% in H113. This positive outlook is supported by a strong pipeline of projects, particularly in the transport sector - which continues to represent the highest proportion of infrastructure projects - and the energy and utilities infrastructure segment. After considerable delays to tenders in the first half of 2013, momentum in the infrastructure sector has started to pick up again thanks to the awarding of large road projects.
Key trends and developments in Colombia's infrastructure industry:
- With continued strong backing from the Colombian government for the sector, we maintain our outlook of a healthy annual average real construction growth of 5.9% between 2014 and 2018.
- There has been an official revision to industry growth in 2012, which was previously believed to have been 3.28%, but is now reported by Colombia's central bank to have been 6.3%. In addition, the industry reported strong growth of 9.89% in H113.
- Strong economic growth - with real GDP growth of 4.5% forecast for 2014 - and expansion in coal, mining, oil and gas extraction, coupled with the multiple signed free trade agreements are creating significant demand for new capacity and better quality infrastructure. Improved access to ports and adequate highways will be essential if the country is to meet the expected increase in exports.
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We highlight that corruption and security remain potent risk factors:
- Colombia scores just 3.7 out of 10 for corruption in the country risk section of our infrastructure risk/ reward ratings, following several corruption scandals within Colombia's public works sector. This illustrates our concern of the impact on the country's business environment.
- - That said, a concerted effort is being made to stamp out corruption in awarding tenders. This has been shown by the creation of the new National Infrastructure Agency (ANI) - which replaced INCO as the official entity in charge of infrastructure concessions. In addition, the government has recently started to implement the OECD Transparency Mechanism for contract procurement (High Level Reporting Mechanism - HLRM). This gives us hope for future improvements.
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