New Construction research report from Business Monitor International is now available from Fast Market Research

Boston, MA -- (SBWire) -- 12/23/2013 --As anticipated, after two years of double-digit growth in 2011 and 2012, a slowdown is on the cards for Ecuador's construction sector. Having expanded by 7.8% in Q113, we predict that real industry growth in 2013 will come in at a more modest 6.8% followed by 5.5% in 2014. This decelerating trend is likely to continue over the medium term, with BMI forecasting average annual growth of around 3.7% between 2014 and 2018. We believe that a drop-off in government spending as a result of weakening oil revenues and a deteriorating consumer outlook are likely to put the brakes on infrastructure investment and residential construction respectively. Meanwhile, Ecuador's persistently weak business environment and prohibitive financing conditions will continue to starve the sector of much-needed investment.
We believe that a drop-off in government spending following February 2013 general election and a weakening consumer outlook are likely to put the brakes on infrastructure investment and residential construction respectively. Meanwhile, Ecuador's persistently weak business environment and prohibitive financing conditions will continue to starve the sector of much-needed investment over the medium term.

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Key developments in the industry:

- Following re-election, we believe President Correa's populist agenda will accelerate throughout his next four-year term. While this poses some upside risk to our forecasts given the focus on social and economic infrastructure investment, we believe chronic financing difficulties will see the government struggle to maintain its ambitious levels of spending.
- In July 2013, the World Bank - through the International Bank for Reconstruction and Development (IBRD) - authorised a US$205mn loan for the construction of the Quito metro system. The project, scheduled to be operational in 2016, will also rely on loans from the Andean Development Corporation (US$250mn), the Inter-American Development Bank (US$200mn) and the European Investment Bank (US$262mn).
- In August 2013, the government agreed to reopen talks with foreign investors over the possibility of a deepwater terminal in the town of Posorja. Spanish group Alianza Internacional Portuaria (Alinport) secured a concession worth US$450mn in 2006 to build and operate a deepwater port with a 15m draft in Posorja, but the work never began and the construction authorisation was later revoked. Furthermore, Ecuador's transport and public works ministry received a letter from the Ecuadorean company Nobis, which is a shareholder in Alinport, claiming that new foreign investors are interested in the opportunity.

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