Egypt Infrastructure Report Q2 2016
BMI View: We maintain our positive construction industry growth forecast for Egypt in 2016 on the back of strong government support for PPPs and ambitious infrastructure development plans, particularly in the housing segment. Strong international interest and external funding for renewable projects will see energy infrastructure grow significantly in the next few quarters.
Latest Updates And Structural Trends
We maintain our construction industry real growth forecast for Egypt in 2016 at 7%, given the large project pipeline and solid foreign investor interest in the market.
The Egyptian government has announced that it will tender 12 public-private partnerships (PPP) in the next nine months. According to the Egyptian Ministry of Finance's PPP Central Unit, the new PPPs will be worth about USD4bn and will cover projects across all sectors, particularly in the transport and energy infrastructure sectors.
China will become an increasingly prominent player in the development of Egypt's infrastructure sector over the next decade. Attractive financing deals and significant expertise in the development of largescale infrastructure projects - particularly in the transport sector - will allow China to gain market share, considerably altering the competitive landscape.
Given Egypt's large and growing project pipeline, we believe the country will face capacity constraints most acutely in the labour market - a significant risk to project implementation.
Gross fixed capital formation, which is a good proxy for construction activity, is forecast to grow 7% in FY2015/16.
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