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Poland Infrastructure Report Q2 2013 - New Market Report

Recently published research from Business Monitor International, "Poland Infrastructure Report Q2 2013", is now available at Fast Market Research


Boston, MA -- (SBWIRE) -- 05/30/2013 -- The anticipated post-football tournament slump is becoming more prominent in the Polish construction sector. A worrying combination of high competition, poorly structured tendering processes, unsustainably low project bids and a frontloaded project pipeline has caused us to highlight the cracks in Poland’s road building sector, as well as downgrade our outlook for construction sector growth in 2013. During the next five years to 2017, we forecast growth in the sector to remain significantly lower than the preceding five years as growth in the infrastructure sub-segment will remain lacklustre.

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The widespread gloom in the overall construction sector is further evident from the 2.6% year-on-year (yo- y) contraction posted by the sector in nominal terms during the first nine months of 2012. The slowdown in investment is being exacerbated by the weakness endemic in the country’s construction sector, following the bankruptcy of more than 200 companies in 2012 and outstanding contract disputes, which have suspended work. We are estimating road construction growth to have decelerated to just 0.7% in 2012, with a contraction of 4.2% expected for 2013. To add to the gloom, the European Commission announced in January 2013 that it has frozen EUR890mn in funding for the sector as a result of price fixing accusations. If funding is cut substantially, we expect to see the road building programme come to an abrupt halt, causing further pain for Poland’s contractors and prompting us to downgrade our outlook further.

However, following are the bright spots in the sector’s growth:

- Road building programme: Poland’s road building programme, running from 2007 to 2015, is expected to draw US$60bn of investment into the sector. The much sought-after A1 motorway road project seems to be picking up momentum. In February 2013, two highway contracts – valued at a total EUR250mn – were awarded to Italian builders Impregilo and Salini and their local partner Kobylarnia. The two contracts relate to the construction of three sections of the A1 Torun-Strykow highway and are due for completion over the next 12 months.
- Airport Investments: The value of the sub-sector more than doubled between 2009 and 2011, to PLN365mn (US$123mn). BMI estimates that projects worth more than US$2bn are under way in the airport sub-segment and these will together result in annual average real growth of 9.4% between 2013 and 2017. Adding to the optimism, Krakow Airport is looking to complete the construction of a new terminal by 2014, as budget carriers increase their presence at the airport.
- Renewable and nuclear power growth: We see solar and offshore wind power being significant beneficiaries of government support, after a draft bill released by the Polish economy ministry on July 27 2012 proposed support for these power sectors.

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