Turkey Infrastructure Report Q2 2016
BMI View: Factors which inform our long-term bullish view on Turkish infrastructure remain in play. Privatisation of assets and the use of PPPs, a supportive government and a geographic and demographic potential. However, over 2016 and 2017, we expect investment to slow - particularly in the residential and non-residential sectors - as currency depreciation, tightening credit and political risk remain key drags on sentiment.
Latest Updates And Structural Trends
We have downgraded our construction industry value real growth forecasts for 2016 and 2017, now 2.1% and 3.7% y-o-y respectively. This is lower than last quarter, following our revised estimation the industry grew by just 1% y-o-y.
Rail and road projects continue to see our forecasts for transport infrastructure growth remain buoyant at 4.8% in 2016. However, energy and utilities infrastructure growth has been lowered for 2016 on the back of the breakdown in relations between Moscow and Ankara and its impact on Turkey's nuclear and pipeline projects.
Driven by the contracts awarded under the government's USD500bn regeneration programme and continued strong building in Istanbul, the residential sector will perform well. We forecast real annual average growth of 2.8% over our 10-year forecast period, with the non-residential sector dragging down that figure.
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