Greece Infrastructure Report Q2 2008

Greece has witnessed tremendous development in its existing infrastructure since preparations began for the 2004 Athens Olympic Games and the momentum has been kept. Alas the deepening global financial crisis may slow short-to-medium term growth, as the government has to revise its debt obligations and fiscal responsibilities, potentially slowing the developments in the infrastructure sector. BMI's newly released Greece Infrastructure Report Q208 forecasts an average construction growth rate of 6.09% over the 2008-2012 period. The construction industry contributed an estimated 9.32% to the Greek gross domestic product (GDP) in 2007.

The European Union (EU) has substantially funded and aided the development of Greek infrastructure.

Major projects currently under way in the country span roadways, railways and airports, as well as telecommunications and energy segments. The number of public-private-partnerships is also growing following the ratification of a new PPP Law in 2005, which has harmonised and unbundled legislation in Greece, and the subsequent establishment of a PPP Unit to oversee the implementation of several pilot projects.

The country's endeavour to create diversified sources of energy has paid dividends, as agreements have been signed with Russia, Turkey, Italy and other states for the construction of oil and gas pipelines.

Major players in the Greek infrastructure industry include locals Elliniki Technodomiki-Aktor-TEB Group, J&P-AVAX, Terna, Mytilineos, Aegek and Athena, some of which also have significant operations abroad, mainly the Balkans and Middle East.

However, growth in the Greek construction industry has been sluggish. It also suffers from certain drawbacks that have hindered its long-term growth potential. Since the majority of the Greek projects are financed by the EU, any reduction in fund allocation can have a significant impact on the industry.

Earlier, Greece had to contend with only a few countries for EU funds. However, the entry of eastern European countries into the EU now means Greece is one of several 'poor' countries seeking EU funds.

Moreover, the nation is plagued by widespread delays in project completion and inadequate private investment. Further, bureaucracy hinders the pace of developmental work.

That notwithstanding, BMI forecasts that Greece's plans to promote itself as a gateway for Chinese and Russian goods and energy to the Balkan Peninsula and the Black Sea region, among other proposed infrastructural developments, will lead its construction industry to reach a value of US$23.93bn by 2012.