Pakistan Infrastructure Report 2016
BMI View: Pakistan's construction sector continues to face major headwinds. Widespread corruption, lackof protection for property owners and limited government spending are all hampering growth, as is theworsening security situation which continues to deter potential foreign investors. The country's growthpotential is substantial - transport, utilities and social/residential infrastructure are suffering from years ofunderinvestment and Pakistan's large labour pool and extensive natural resources mean that, should theinvestment environment improve, growth could be rapid. At present, however, this potential is unlikely to berealised and growth will remain subdued.
Forecasts and Latest Updates
Chinese President Xi Jinping has signed an agreement with Pakistan promising investments worthUSD46bn. The investments will be focused on building the China-Pakistan Economic Corridor, whichwill be a network of railways, roads and pipelines between the two nations. The economic corridor willrun 3,000km from Gwadar, Pakistan to the western Xinjiang region in China.
Transport and utilities are the main focus of investment, with a large number of projects under way inboth sectors. Both are benefiting from regional financing: the Asian Development Bank (ADB) isproviding USD800mn of loans to strengthen the country's power sector infrastructure as well as cofundingthe USD327mn Hassanabdal-Havelian Expressway (E-35) project.
Pakistan's construction sector saw growth of an estimated 3.59% in 2015, down from 5.82% growth in2014. Over the remainder of the forecast period we expect to see annual growth of around 4% inconstruction industry value which, although positive, falls far short of Pakistan's potential growth.
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