Argentina Infrastructure Report Q2 2012
Business Monitor International, March 2012, Pages: 64
Argentina Infrastructure Report provides industry professionals and strategists, corporate analysts, infrastructure associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Argentina's infrastructure industry.
BMI View: Argentina’s infrastructure sector remains dependent to some extent on a US$10bn credit agreement from China. In addition, events in Q411 reinforced our view that the financial support of multilaterals, notably the Inter-American Development Bank (IDB), will remain a key source of infrastructure financing.
Meanwhile, the sector continues to benefit from robust economic activity, although we expect this to cool slightly in 2012 - BMI forecasts a 4.1% year-on-year (y-o-y) increase in real GDP - as the government is forced to scale back some of its pre-electoral spending. Data from the INDEC reveals that Argentina’s construction industry outperformed by an impressive 10% y-o-y in real terms through the first three quarters of 2011 and we therefore estimate that the sector experienced growth of 9.9% for the year. We are forecasting that Argentina’s construction sector will, in real terms, grow by 3.3% y-o-y in 2012 and 4.8% in 2013.
Key developments include:
- Argentina has inaugurated its third nuclear power plant. The Atucha II plant was opened by Argentine President Christine Kirchner, who said the plant was a step towards diversifying the country's power production. The 700MW plant is expected to be fully operational by Q312, raising the proportion of Argentina's power production from nuclear to 10%.
- The Inter-American Development Bank (IDB) offered US$400mn in financial assistance to Argentina to develop infrastructure for 70 poor urban settlements (December 2011). The loan, secured by the Ministry of Federal Planning, Public Investment and Services, will be directed towards the provision of basic services, such as electricity, infrastructure and gas distribution for the urban settlements. The loan will also be used to build storm drains, access roads, pedestrian networks, green spaces, and water and sewage networks. The project has been designed to benefit 280,000 low-income residents.
- This quarter saw Argentina downgraded in BMI’s infrastructure risk/reward ratings. Having been on our political risk radar for some time, the downgrade reflects the rising risks within the country’s business environment. Although the October 2011 elections ran fairly smoothly, seeing incumbent Cristina Fernández win again as anticipated, the policy continuity is, in this case, detrimental to the country’s business environment. In the immediate aftermath of re-election, a form of capital control on the profits of extractive industry players was unilaterally passed, indicating a continuation of ad hoc marketunfriendly policies, making for an uncertain policy environment.
- Argentina's foreign minister, Hector Timerman, announced the completion of rail upgrade negotiations with Chinese engineering company China Machinery and Equipment, reports the Railway Gazette. The company will undertake a US$2.5bn upgrade of the Belgrano rail network. The contract was expected to be signed in October 2011.
BMI Industry View
SWOT Analysis
Argentina Infrastructure SWOT
Market Overview
Competitive Landscape
Argentina
Table: Argentina EQS Data
Building Materials
Global
Latin America
Cement Forecasts
Table: Argentina Cement Production and Consumption Data
Table: Argentina Cement Production and Consumption Data
Industry Forecast Scenario
Table: Argentina Construction And Infrastructure Industry Data
Table: Argentina 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 Construction And Social Infrastructure Outlook And Overview
Risk/Reward Ratings
Argentina Risk/Reward Ratings
Rewards
Risks
Regional Overview
Latin America Infrastructure Risk/Reward Ratings
LATIN AMERICA INFRASTRUCTURE RISK/REWARD RATINGS
On the other hand, Panama and Costa Rica have emerged as outperformers, pulling in scores above the regional average risk/reward rating. Both
have optimistic growth outlooks, with Panama playing host to some of the largest projects currently underway in the region - namely the Panama
Canal expansion. For both, the growing precedent for successfully procured large-scale infrastructure projects will only boost their profiles in the
coming years.
Skanska Latin America
Roggio
Techint
Global Overview
Themes And Trends In Infrastructure For 2012
Industry Forecasts
Construction Industry
Data Methodology
New Infrastructure Data Sub-sectors
Construction
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
Sources
- Skanska Latin America
- Roggio
- Techint
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