July 18, 2011 -
PRLog -- The onstruction industry in Canada has continued its trend of outperformance this quarter, buoyed by a particularly healthy PPP sector. The level of PPP involvement is considered world leading and we expect this to have a positive effect on baseline indicators. Already figures for 2010 have been revised up on the first nine months data showing a 5.2% real growth in the construction industry. For 2011 real year-onyear growth (y-o-y) of 4.1% is forecast vauling ithe industry atUS$92.5bn. Growth is expected to continue until the end of the forecast period in 2015 when industry value will be US$110.2bn Key growth drivers in our forecast include: The continuing high level of PPP activity in Canada's healthcare sector in particular, coupled with the size of recent contracts awarded, illustrate the attractiveness of PPPs and also reflect country's relative strength in this area compared to its peers. As a result we expect to see continued opportunities for companies with a well-established history of PPPs in the sector. In October 2010, the Canada Pension Plan Investment Board (CPPIB), the country's largest pension manager, announced it was purchasing a US$876mn stake in a major highway, increasing its infrastructure investment portfolio, despite a period of uncertainty in terms of equity returns. The purchase will give the company a 10% share in the 407 Express Toll Route in Greater Toronto. CPPIB is rated number one in the world for private equity investors and helps to secure the company's prominent position. A slew of hydropower projects announcements in the last quarter added confidence to the sector. Amongst these a new CAD6.2bn (US$6.1bn) hydropower project is likely to change the landscape of electricity politics in eastern Canada. The project will break the province of Newfoundland and Labrador's reliance on Quebec, currently the hydro powerhouse of Canada. We continue to believe that the Canadian economy is due a slowdown going into 2011, in part because of a slowdown in the crucial US export market, but also because Canadian consumers are set to relent following a credit binge. For 2011, we are maintaining our 2.4% growth forecast for now. Our overall view, which we have held since the recovery began, is that Canada is better positioned for growth than the US, and these growth figures reflect that performance differential, with the US set to expand by 2.6% in 2010 and just 1.6% in 2011.
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