Russia's construction industry to regain growth momentum
Russia’s construction industry is expected to reach a value of US$301.0 billion in 2021 in real terms, measured at constant 2010 US dollar exchange rates, according to a report by Timetric's Construction Intelligence Center (CIC).
The ongoing modernization of public infrastructure will be a key source of support for growth in construction activity. Under the Railway Strategy of Development 2030, the government plans to lay 20,000km of track at a cost of US$62.5 billion. Construction activity ahead of the 2018 FIFA World Cup is also boosting the sector.
In real terms, the industry’s output value is expected to grow at an annual average rate of 1.8%, a marked slowdown from the 7.5% CAGR witnessed during the review period (2012-2016). This belies shifting growth patterns, however. After average annual growth of 12.0% during 2010–2014, the industry registered a decline of 7.4% in 2015 and 2.1% in 2016 in real terms. This was due to Western sanctions, a fall in revenue from oil exports, and weak European market conditions. All these factors reduced the government’s infrastructure expenditure. However, the industry is anticipated to post a slight recovery in 2017 due to the government’s focus on developing the manufacturing sector to diminish its reliance on oil exports. This has informed Timetric’s outlook for a recovery in the industry following a period of weakness and declining output in recent years.
The government’s focus on the development of affordable housing for middle- and low-income groups is expected to drive the market’s forecast-period growth. Additionally, a decline in the lending interest rate will spur residential construction growth.
Over the forecast period, the infrastructure construction sector is expected to benefit from the government’s plan to develop transport infrastructure. According to projections, the volume of metro passengers is expected to increase by 40%, from 2.5 billion in 2016 to 3.5 billion by 2035. To accommodate this increased demand, the government plans to build 78 new metro stations and 160km of new track. Further, in October 2016, the government announced plans to build six new metro stations and 60km of new track under the Third Interchange Circuit (TIC) plan to improve connectivity within Moscow by 2020. The government is also focusing on the development of the railway network. In March 2016, it announced plans to build 1,200km of new track by 2020, and an additional 750km by 2025. It also plans to renovate dilapidated airport infrastructure through an investment of RUB225.5 billion (US$3.4 billion) by 2020.
About this report
This information is taken from the Timetric report: ‘Construction in Russia: Key Trends and Opportunities to 2021'.
For more information visit: https://www.timetricreports.com/search/construction/“
CIC clients can access the report here
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