New Market Research Report: Libya Infrastructure Report 2011

Feb. 4, 2011 - PRLog -- Libya's construction sector is fast becoming one of the most active in the Middle East and North Africa (MENA) region, with outstanding growth recorded in 2009. Historic growth levels combined with substantial infrastructure investment plans have guided an upward revision in our growth outlook for Libya's construction sector over the short term, with real growth of 8.5% and 7.9% expected in 2011 and 2012 respectively.

There are a number of factors driving our optimistic outlook for Libya's construction sector:

* Construction industry real growth for 2009 was reported at 9% year-on-year (y-o-y), making it one of the best performing countries globally, despite a difficult backdrop in terms of risk aversion and reduced oil revenues. Nominal growth came in at 26% y-o-y, however, this is cause for some concern, indicating high inflation levels in the construction sector.
* Substantial investment plans have been announced for the housing and infrastructure sectors, with a US$100bn, four-year (2009-2012) investment plan currently being executed. In June 2010, this was further increased by US$52bn, meaning a considerable amount of money will be directed to the construction sector.
* A healthy budget surplus is propping up investment plans, making them easily feasible. In 2010, BMI estimates that Libya's budget surplus was 14.7% of GDP, and will remain in the double digits in both 2011 and 2012 (11.9% and 10.3% respectively). This is enabling the government to procure large-scale and capital-intensive construction projects.
* Demand stemming from a young and increasingly rich population is putting pressure on existing infrastructure. Economic growth is also demanding improved transport networks and access to electricity, both of which are crucial if the government wants to diversify away from the hydrocarbons sector into tourism and industrial production. The government is hoping to position Libya as the gateway to Africa, meaning improved transport networks are a priority.
* The presence of a number of international construction companies gives further credence to Libya's plans, and the timely execution of projects. Austria's Strabag, Brazil's Odebrecht, Egypt's Arab Contractors and Canada's SNC-Lavalin are just a few of the companies already active in the country, and therefore likely to benefit from further contract opportunities.

A combination of the above factors is driving our optimism for Libya's construction sector, with 2011 and 2012 expected to present the strongest growth owing to the four year investment plan running to 2012. Beyond this, between 2013 and 2020, growth is expected to slow, although it will remain strong, with annual average real growth of 5.5%. However, there is upside potential to this as another investment plan will likely follow the current one.

Despite this optimistic outlook, there are a number of risks for investors, stemming predominantly from the business environment.

The major barrier to growth is related to Libya's business environment, which is unpredictable and desperately in need of reform. Libya scores 45.7 out of 100 for risks in BMI's infrastructure business environment; however a rewards score of 53.2 reflects the opportunities on offer for the brave investor.

Since the lifting of UN sanctions in 2003, investor interest in Libya has increased and the government has been actively pursuing international private investment. However, although the government offers stability and security to an investor, arbitrary decision making and a lack of transparency in investment laws could derail growth potential. The country is ranked the worst in North Africa according to Transparency International's 2010 Corruptions Perception Index (coming in at 146 out of 178 states rated), while the World Economic Forum placed the country 100 out of 139 economies in terms of competitiveness.

Recent moves to liberalise the economy show the government is moving in the right direction; however, we believe that progress will be slow and the business environment will remain the primary risk to our forecast.

For more information or to purchase this report, go to:
-  http://www.fastmr.com/prod/114379_libya_infrastructure_re...

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Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets.  BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports.  Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports.  View more research from Business Monitor International at http://www.fastmr.com/catalog/publishers.aspx?pubid=1010

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.