France Infrastructure Report Q2 2016
BMI View: The construction industry should return to growth in 2016, with 0.74% real growth after years of strong contraction. Nevertheless, growth will remain weak over the next few years as a weak domestic economic environment and ongoing policy and regulatory uncertainty are undermining investor confidence and we expect to see limited gains in terms of fixed capital formation.
Latest Updates And Structural Trends
Weaknesses in France's labour market - in terms of unemployment and lack of competitiveness - support our modest outlook over the country's construction industry.
The outlook for the housing market remains bleak as economic uncertainty and stubborn unemployment rates prevent a recovery in the demand for housing. However, a small recuperation in housing permit applications should stop the contraction and enable minimal, but positive growth in the sector for 2016.
Transport infrastructure remains the strongest sector in France's construction market, with annual average growth of 3.0% expected throughout the forecast period to 2025. Railway projects attract the majority of the investment in the sector.
France's energy and utilities infrastructure sector is expected to record minimal growth in 2016, will slightly contract in the years thereafter and lose market share to the more vibrant transport infrastructure sector throughout our forecast period to 2025. We are however, increasingly optimistic over opportunities in the solar and wind power sectors on the back of improved regulatory clarity, strong government support and ambitious targets for non-hydropower renewable, as highlighted by our Power and Renewables team. This presents upside risks to our forecast over the coming quarters based on industry uptake and confidence towards financing the sector.
Learn how to effectively navigate the market research process to help guide your organization on the journey to success.Download eBook