Dec. 3, 2009 -
PRLog -- Although BMI expects Iran's construction industry to continue to expand over the forecast period, pessimism over the country's macroeconomic indicators have caused us to decrease our forecasts for the construction sector in the short term. In 2009, we expect the sector to expand by 2.77% in real terms, down from the 11% growth seen in 2008. BMI does not expect market growth to return to pre-crisis levels over the next five years, with the total value of the sector reaching US$31.36bn in 2013. This represents an annual average growth rate of 4.3% in real terms. This compares with an average real growth rate of 12.2% in the 2004-2008 period. Iran's fiscal outlook is grim. The rally in oil prices over the course of H109 has certainly helped, considering that oil revenues contribute over half of the central government's total fiscal revenues. Nonetheless, Tehran will find it nigh on impossible to escape from its fiscal hole over the next five years (at least). We are projecting a fiscal deficit of US$35.4bn (10.9% of GDP) in FY2009/2010 (note: Iranian years begin in March). Moreover, we see similarly sized shortfalls (in nominal terms, though falling as a percentage of GDP) out to FY2013/2014. This is bound to impact major public sector projects, and so we are expecting a slowdown in infrastructure investment. In the four months to July 2009, Iranian steel production reached 3.686mn tonnes - an increase of 9% year-on-year. This suggests that in the short-term at least the construction sector appears to be doing well, despite the economic downturn. However, over the forecast period we expect growth will slow in the sector as public funds dry up. Indeed, in July 2009, Iran announced that that the construction of oil refineries in the country would be entirely handed over to the private sector, as the country embarks on a major privatisation drive. However, on a positive note in August 2009, it was reported that Iran has begun work on the first monorail system in Qom. The first phase of the light-rail project includes the construction of a 6km-long rail line, which will improve access to the city's grand mosque. The estimated cost of the first phase is over US$120mn, and it is expected to be completed within 30 months. On completion, the monorail will be 18km long in total, and aims to ease the traffic congestion in the city. Iran already has a developed railway system carrying both passengers and freight. Iran's railway network services approximately 11% of the total freight transported in the country. But, out of a total of 8,367kms of railway track, only 146km is electrified. Meanwhile, Alo Akbar, the head of the Atomic Energy Organisation of Iran (AEOI), has announced that no date had been set for the start of operations at the controversial Bushehr nuclear power plant. The plant began its pre-commissioning stage in February 2009, with commentators expecting operations to commence by the summer; Russia has already delivered the nuclear fuel for the reactor under its US$1bn contract to build the plant. However, as reported by the Fars News Agency in July 2009, the AEOI is continuing inspections of the plant and considering all safety precautions before giving the green light.
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