Boston, MA -- (SBWIRE) -- 03/10/2014 -- Angola's construction sector is experiencing a boom, as the government focuses its efforts on improving both social and economic infrastructure. The FY2014 budget allocates a third of its US$55bn in spending to infrastructure and social projects and complements the 2013-2017 National Development Plan which is running concurrently. Investment across the housing and the utility sectors in particular is driving our forecast for 11.9% average annual real construction industry growth between 2014 and 2018.
Angola's construction industry is expected to be boosted by a combination of government investment, as part of a drive to develop infrastructure to support economic diversification and a strong expansion in oil production and therefore revenues. The country should also see continued investment from China, Brazil and Portugal, with the former two providing funding to support investments through state-owned banks. With oil exports to the US falling, China will become an increasingly crucial partner for Angola in order to maintain strong oil revenues as production continues to grow domestically.
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Key elements driving our positive forecast:
- The FY2014 budget outlines spending of US$55bn, of which a third will be targeted towards infrastructure and social projects - such as healthcare, education and housing. The budget is a modest increase from 2013 levels (US$49.9bn), however maintains the elevated level of spending versus 2012 (which was 60% lower than 2013). Increase oil revenues from production growth and elevated oil prices should boost revenues over 2014 to support investment.
- The 2013-2017 National Development Plan will target social infrastructure and basic utilities. Investment in water and electricity provision will be prioritised, as will that into expanding healthcare, education and access to housing. It is hoped that these measures will help the country reach average annual GDP growth of 7.1% over the period, with 7.3% per annum expected in the non-oil sector.
- Over the medium term, funding for infrastructure projects should continue to be available. Crude oil production is expected to grow by an average of 6.7% between 2014 and 2018, which will support revenues for infrastructure investment. In addition, in 2014 we expect Angola's repeatedly delayed Eurobond to be issued. The government is hoping to raise US$500mn in capital, some of which is earmarked for infrastructure investment.
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