Venezuela Infrastructure Report 2008

Venezuela's infrastructure sector has displayed double-digit growth in the last few years. Oil revenues form the mainstay of the Venezuelan economy and largely steer growth of all industries, including construction. BMI's newly released Venezuela Infrastructure Report 2008 forecasts the industry to grow at an average rate of 8.2% during 2008-2012.

Venezuela hosts large natural gas reserves and the present government-under the leadership of President Hugo Chavez-is promoting the country as a potential natural gas exporter. A number of pipeline construction projects with other South American nations are planned, or are currently underway. The Latin American nation suffers from a shortage of residential units, but the government has announced plans of constructing 85,000-95,000 residential units for the poor during 2007. Road and highway projects are also on the country's high priority list with approximately US$5bn likely to be spent on road construction up to 2009. Other projects include construction and expansion of refineries, power plants and petrochemical complexes. Furthermore, institutions such as the Andean Development Corporation have been providing financial assistance to Venezuela.

Excessive dependence on oil revenues makes the Venezuelan economy highly susceptible to global recessions and vulnerable to other external risks. The economy is also grappling with high levels of inflation. The overall financial infrastructure in the country-in spite of having improved in the last few years-continues to remain way below international standards. Corruption in the country has also touched record levels. The country's judicial system is also found to be lacking.

Despite all risks, BMI expects growth in the Venezuelan infrastructure sector to continue. The Venezuelan construction industry is forecast to be worth VEB70.48trn (US$21.87bn) in 2012, and contribute 10.73% to the country's Gross Domestic Product (GDP). Development of oil and natural gas related infrastructure holds immense potential. Increased levels of urbanisation and higher personal disposable incomes are also expected to propel growth.