Abstract
A growing budget deficit and burdensome public debt are severe threats to the
Greek economy. They are
also a major constraint on the government as it
attempts to tackle the coming recession. This continues to
impede the
government’s ability to implement stimulus plans like other European
peers, leaving the
overall outlook for investments in infrastructure
unchanged for this quarter.
In BMI’s Q209 Greece Infrastructure
Report, we forecast that construction sector real growth will
continue
along the downward trend it embarked on in 2008 as revised data from the
national statistics
agency revealed.
Little activity has been recorded
in the infrastructure sector in the past quarter; while the intentions and
capabilities gap for public private partnerships (PPP) is widening as the
crisis deteriorates. The industry
took a heavy blow when Hutchison walked
away from the Thessaloniki port concession in December
2008, and the
subsequent cancelation of the tender in March 2009 left the government to foot
the bill for
the expansion projects. The upcoming litmus test for the
industry will be the launch of the tender for
concession for the Heraklion
airport in Crete.
Private sector involvement becomes more important when
looking at macroeconomic indicators: The
budget will come under strain
from falling revenues and according to BMI forecasts, the ballooning
external debt of the government will slow short-to-medium term growth, because
the government has to
revise its debt obligations and fiscal
responsibilities, potentially slowing developments in the
infrastructure
sector. This will be accentuated further with liquidity drying up rapidly in
the financial
system, making raising capital extremely difficult in 2009
and 2010.
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 in the Balkans and Middle East. We anticipate that expansion abroad
will
become an even greater of part of corporate strategy in the coming
years, as it will help offset the
downturn in Greece. However, it should
be noted that with the possible exception of Saudi Arabia and
Qatar, the
rest of the Middle East and the entire Balkan region does not look too
promising for 2009-2010
either.
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