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Romania Infrastructure Report Q2 2010
Market |
Construction |
Report Type |
Market Research |
Country |
Romania |
Published |
3 March 2010 |
Number of Pages |
69 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
We estimate a contraction for Romania’s construction sector amounting to 8.7% in real terms during 2009, largely due to the global economic downturn, which generated an estimated 7.0% contraction in Romania’s economy as a whole over the year. The size of the contraction in the construction industry is also partly due to a very strong sector growth rate in 2008, which provided a high base. For 2010, we anticipate a return to positive sector growth (albeit at a modest pace). Our current forecast is that the construction sector will expand by 4.5% in 2010, on the back of a predicted return to growth in the wider economy. Across the remainder of our forecast period (2011-2014) we expect the rate of construction sector growth to gradually accelerate, to an annual 6.9% by the end of the period.
Overall, Romania scores moderately in our Project Finance Risk Ratings. The country is placed seventh in the region, out of a total of sixteen countries, leaving it just above mid table. Political and security stability underpin the country’s ranking, which would be higher, were it not for a historical track record of high inflation and an uncertain legal environment.
Romania is in the top half of our Business Environment league table for Central and Eastern Europe. Overall, the region as a whole scores poorly, particularly in terms of the Infrastructure Market rating. Romania’s relative performance is therefore supported by its peers’ poor performance. The country does relatively well in the Limits of Potential Returns category, but less well in terms of the Risks to the Realisation of Returns.
The European Investment Bank (EIB) signed a finance contract with Romania on November 12 2009 to provide support of EUR395mn (US$590.3mn) for the modernisation of the Bucharest metro network. The investment will be made in Phase IV, Line 5 Drumul Taberei-Pantelimon, section Drumul Taberei- Universitate, of the network. The loan comes in addition to previous investments made for the modernisation of the underground system. SC Metrorex will carry out the project, which is scheduled to be completed by the end of 2015. The project, with a total estimated investment of EUR883mn (US$1.32bn), includes construction of a new line and purchasing of new rolling stock. It is planned to expand the metro and enhance the operational efficiency of the public transport system in Bucharest.
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