Fast Market Research recommends "Colombia Infrastructure Report Q3 2013" from Business Monitor International, now available
Boston, MA -- (SBWIRE) -- 08/06/2013 -- After considerable tender delays in H113, the infrastructure sector has started to pick up momentum again with the awarding of large road projects. Although the Colombian construction industry has been highly volatile in the last decade, the government continues to push ahead with necessary infrastructure investments, primarily in the transport sector which continues to represent the highest proportion of infrastructure projects. This is a priority for the government to reap the benefits of its growing mining industry and improve the competitiveness of its exports in general. Having been dubbed the 'engine for development', we believe Colombia's construction sector will see strong real growth of 5.5% in 2013.
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 5.3% between 2013 and 2017.
- The infrastructure industry holds significant potential for investors, with real growth of 5.5% forecast for 2013. The residential and non-residential sector will see real growth of 3.3% - a healthy recovery from the contraction seen in 2010.
- Strong economic growth - with real GDP growth of 4.3% forecast for 2013 - and expansion in coal, mining, oil and gas extraction, coupled with the signed US free trade agreement are creating significant demand for new capacity and better quality infrastructure. Better 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. This gives us hope for future improvements.
- Despite undergoing peace negotiations talks and the significant weakening of the FARC by government security forces so that insecurity no longer represents a systematic threat to the state, the risk of violence still persists.
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