Bangladesh Infrastructure Report Q2 2016
BMI View: Our forecast for sustained real growth for Bangladesh's construction sector over the coming decade is underpinned by significant greenfield infrastructure projects, economic growth and strong foreign investor interest. However, the sector's expansion will be tempered by a still-challenging business environment, a lack of implementation capacity as well as potential political and social instability.
Latest Updates And Structural Trends
The construction industry in Bangladesh registered real growth of 8.7% in 2015, reaching a total value of USD15.1bn. We forecast the growth rate to accelerate to 9.5% in 2016 on account of strong economic growth and rising investor interest. We anticipate the industry to sustain a similar pace of expansion over the coming decade, averaging 8.4% real growth per annum.
Over the short-term, the construction industry will benefit from rising public expenditure on infrastructure development. In its FY2015/16 budget, the government outlined plans to double its development expenditure in the energy and power divisions as well as increase its transport and communication budget 44%.
We hold our longer-term view that the immense potential of Bangladesh's construction industry will be tempered by a poor business environment, underdeveloped legal system, lack of implementation capacity as well as potential political and social instability.
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