Bosnia-Herzegovina Infrastructure Report Q2 2012

Date: April 10, 2012
Pages: 62
US$ 1,295.00
Report type: Strategic Report
Delivery: E-mail Delivery (PDF), Download
ID: B3AD320A911EN

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BMI View: A highly uncertain political set-up and vulnerability to the eurozone debt crisis are likely to act as major dampeners for solid growth in Bosnia and Herzegovina (BiH)’s construction activity over the next few years. BMI is forecasting lacklustre growth of only 0.6% year-on-year (y-o-y) in real terms in 2012, which will be followed by better but still sluggish 2.0% annual average y-o-y growth between 2013 and 2021.

Although a new government was finally formed in February 2012 – after almost 16 months of wrangling, its smooth functioning with coalition of parties (with disparate ideologies) remains doubtful. The risk is significant for the country’s construction and infrastructure sector, given that it has the potential to impede medium-term economic reforms and infrastructure development in the country. We believe that the fall in demand for exports from the eurozone and the consequent slowdown in Bosnian economic growth to 1.9% y-o-y in 2012 (according to BMI forecasts) – compared with an estimated 2.4% real GDP growth in 2011 will curb the government’s appetite to invest in infrastructure development.

Despite these risks, following are the key factors contributing to growth over the forecast period:
  • The EBRD’s near-term plans for Bosnia emphasise on infrastructure, and the bank has outlined its intentions to support transport, energy and municipal and environmental infrastructure. This is in addition to the BAM10bn (EUR5.12bn) investment plan allocated by the government for the energy sector by 2018.
  • Within the country’s transport infrastructure space, BiH is undertaking widespread development and moderation programmes. In February 2012, construction tender for the Prnjavor-Doboj section of the Banja Luka-Doboj motorway was launched. The EUR180mn (US$247.47mn) motorway will link to the Banja Luka-Gradiska motorway. In the same month, EBRD granted approval for a sovereign loan of EUR28.5mn (US$37.96mn) to BiH to build a new bypass linking the major east-west route passing through Brcko District.
  • There was also progress on a raft of energy projects. In September 2011, Republika Srpske signed deals with Italian firm Seci Energia and Serbian utility for the development of hydropower facilities on the Drina River. The move will lead to the creation of a joint venture in which Seci will own 51%, with the remainder divided between Republika Srpske and Serbian utilities.

Taking into account the risks and the growth opportunities, we rank Bosnia 14th in BMI’s Central and Eastern Europe (CEE) infrastructure risk/reward ratings table. The relatively small size of Bosnia’s construction market in terms of industry value – estimated to be less than US$900mn in 2011 – stands as a major deterrent to its score in rankings system, as much as the deep structural problems such as political and economic stability.
BMI Industry View
SWOT Analysis
Bosnia Infrastructure SWOT
Market Overview
Competitive Landscape
  Table: EQS
Building Materials
Cement Forecasts
  Table: Bosnia Cement Production and Consumption Data
  Table: Bosnia Cement Production and Consumption Data
Industry Forecast Scenario
  Table: Bosnia Construction And Infrastructure Industry Data
  Table: Bosnia Construction And Infrastructure Industry Data
Construction and Infrastructure Forecast Scenario
Transport Infrastructure
Transport Infrastructure Outlook and Overview
Major Projects Table – Transport
  Table: Major Projects - Transport
Energy and Utilities Infrastructure
Energy and Utilities Infrastructure Outlook and Overview
Major Projects Table – Energy and Utilities
  Table: Major Projects – energy And Utilities
Residential/Non-Residential Construction and Social Infrastructure
Residential/Non-Residential Building Outlook and Overview
Major Projects Table – Residential, Non-Residential and Social Infrastructure
  Table: Major Projects – Construction And Social Infrastructure
Risk/Reward Ratings
Bosnia Risk/Reward Ratings
Regional Overview
Eastern Europe Infrastructure Risk/Reward Ratings
Eurozone Debt Crisis Weighs On Region's Recovery
Regional Infrastructure Risk Reward (Rr) Ratings
Global Overview
Industry Forecasts
Construction Industry
Data Methodology
New Infrastructure Data Sub-sectors
Capital Investment
Construction Sector Employment
Infrastructure Business Environment Rating
  Table: Infrastructure Business Environment Indicators
Project Finance Ratings
  Table: Design And Construction Phase
  Table: Commissioning And Operating Phase – Commercial Construction
  Table: Commissioning And Operating Phase – Energy And Utilities
  Table: Commissioning And Operating Phase – Transport
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