Czech Republic Infrastructure Report Q1 2009

In time for the launch of BMI's infrastructure Q109 reports we have revised our construction data. The data has been modified from 2008 onwards. This initiative stems from new methodology being introduced in our forecasting method and aims to increase the relevance and reliability of BMI's infrastructure data. BMI strives to be able to offer five year industry forecasts and we are happy to announce that the majority of infrastructure data for the Czech Republic now stretches to 2013.

For 2009 BMI forecasts that the Czech Republic's construction industry will be worth CZK244.03bn (US$13.14bn) this is a growth of 6.37% on the 2008 figure of CZK221.10bn (US$12.64bn). The country's construction industry growth year on year is set to remain in the 5-7% growth, but will dip to just a 2.45% increase for 2013. In 2009 we predict that the construction sector will make up 5.82% of the Czech Republic's GDP, this figure is set to grow to 6.07% by the end of our forecast period highlighting the importance of the sector on the Czech Republic's economy. Construction is a vital area of employment for the citizen's of the Czech Republic. In 2009 the country's construction workforce will dip slightly with 4.79mn labourers, with the sector making up 9.75% of the country's total workforce.

BMI believes that the construction sector, not just domestically in the Czech Republic, but worldwide will be buffeted by the global economic downturn and will lead to investors tightening their belts, leaving less money to go towards funding infrastructure related projects, especially those in the real estate sphere.

This could see a serious decline in the number of companies available to participate in Private Public Partnership (PPP) projects, which will lead to delays and in some case cancellations of proposed infrastructure schemes.

In relation to the Czech Republic, BMI has no news of specific projects that may be affected by the downturn. With the information that is currently available to us, we assume that some of the large infrastructure initiatives launched in 2008, such as the tender to sell Prague Airport by Q309 and the huge road transport projects which were put forward in 2007, including the CZK4.2bn (US$221mn) ringroad project around the capital, which was won by Skanska, will go ahead.