Australia Infrastructure Report Q2 2016
BMI View: Slowing GDP growth and political tensions in the run up to federal elections are dampeninginvestor sentiment in Australia, particularly as the key mining sector continues to post weak results andconcerns are rising about the overvalued housing market. The outlook for Australia's construction sectortherefore remains subdued, with low single digit growth expected for much of the forecast period through to2025. While limited activity in the residential sector and in transport infrastructure will stimulate someincrease in construction sector value, overall growth prospects are muted.
We currently maintain our estimate for growth of 0.4% in the construction sector for 2015, although wenote our forecasts may be subject to downward revision, following the release of full-year figures, withseveral regions reporting a fall in construction activity over the last quarter. The outlook for 2016 ismarginally more positive, with growth forecast at 1.6% based primarily on a number of projects in thepipeline in the residential and transport infrastructure sectors.
Several transport projects are progressing, underpinning our forecasts for a return to growth in thetransport infrastructure sector in 2016. These include the Melbourne Metro Rail public/privatepartnership project where the first package of works will reportedly start in 2017, delivering criticalworks worth hundreds of millions of dollars to prepare main sites for the start of major construction in2018.
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