Bulgaria Infrastructure Report Q2 2016

Bulgaria Infrastructure Report Q2 2016

BMI View: Bulgaria's construction industry will contract 1.7% y-o-y in 2015 and will slightly grow 0.5% yo-y in 2016, supported by the transport infrastructure sector, particularly projects in the road and railwaysubsectors. Although Bulgaria will continue to be highly dependent on EU funding for infrastructuredevelopment, we have started to note increased international interest in this market.

Latest Updates And Structural Trends

Driven by transport infrastructure projects, we forecast Bulgaria's construction industry will grow by anaverage of 1.7% over 2016-2025. However, infrastructure projects will continue to face challengessecuring financing.

Bulgaria remains highly dependent on EU funding for infrastructure projects, particularly in the transportsector. As such, slow EU recovery will limit the speed of Bulgaria's transport infrastructure growth.

Improved absorption of EU structural funding will be supported by public investment projects to a certainextent.

Growth in Bulgaria's energy and utilities sector has been subdued due to fiscal constraints and a lack ofconsistent foreign competition and skills. The sector faces a slow path to recovery, particularly nowconstruction of the South Stream pipeline has been cancelled and the agreement on the termination of thecontract between Gazprom and Netherlands-based South Stream Transport has been approved by theBoard of Directors of the Russian company.