Boston, MA -- (SBWIRE) -- 08/16/2012 -- BMI View: Bosnia and Herzegovina (BiH)'s construction sector continues to struggle against a headwind of uncertainty. Should the eurozone crisis pass the point of no return, or Bosnia's coalition government collapses, there is a risk of a much more pronounced downturn in economic activity. Construction industry value is forecast to stand at US$0.92bn in 2012, with average year-on-year (y-o-y) growth of just 1.5% expected to see the industry value rise marginally by 2016, to US$1.1bn.
Key factors contributing to growth over our 10-year forecast period include:
- The European Bank for Reconstruction and Development (EBRD) has announced that it has awarded a EUR150mn (US$197mn) loan to Bosnia-Herzegovinian construction company Autoputevi Republike Srpske (ARS). ARS will use the finance to undertake the Banajaluka-Doboj Motorway Construction Project, the first phase of which involves construction of the 37km Prnjavor-Doboj section.
- Bosnian-Herzegovinian state utility JP Komunalno Capljina has been awarded a EUR5mn (US$6.53mn) loan by the European Bank for Reconstruction and Development. The loan will enable the utility to improve water supply infrastructure in the municipality of Capljina. More than 2,300 inhabitants of the municipality will be affected by the improvements, which will be completed by the end of June 2015.
- Bosnian renewable energy company Eko Energija has opened its first solar plant in Bosnia. The EUR409,000 (US$542,758) facility is connected to the electricity network of state-owned utility Elektroprivreda BIH.
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Bosnia's political risk profile has received a boost following an agreement among the six main political parties to form a government. It is hoped that this will not only fill the leadership void and provide a credible government to tackle economic reform, but will also pave the way for the release of funds from the IMF and EC. The EU, which has played an important role as power broker in the Balkans, is likely to see its influence fade as enlargement fatigue and growing domestic problems constrain the bloc's foreign policy influence in the region. This leads us to take a more negative view on the Balkans' long-term political and economic outlook.
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