CEE Risk/Reward Ratings: Stagnant Europe Stymies Recovery
BMI View: BMI's infrastructure risk/reward ratings (RRRs) for Central and Eastern Europe (CEE) have followed a broadly negative trajectory this quarter, as regional market conditions remain stagnant. As such, our average RRRs have been revised down slightly, reflecting a decline in European aggregate demand and a lessening of EU support for peripheral countries. Poland continues to outperform, whilst neighbour Ukraine shows little sign of upward movement from the bottom of our rankings.
Key views from BMI's Central and Eastern European Infrastructure Risk/Reward Ratings:
Key regional findings:
Despite the last three months witnessing a Spanish bailout and renewed Greek commitment to the Euro, Eurozone conditions remain muted, dampening growth prospects across the entire region. As such, our average RRRs have been revised down slightly, reflecting a decline in European aggregate demand and a lessening of EU support for peripheral countries.
Scores across the region are weighed down by high levels of corruption relative to the rest of Europe - this is especially true of the Ukraine, which we continue to highlight as a high-risk regional underperformer. A dearth of investment opportunity following the UEFA European Championships tournament will also weigh heavily on sector prospects.
Gross fixed capital formation remains low across the board and we see little room for government investment in infrastructure in the current fiscal environment. Following a period of large-scale capital investment and construction industry growth, Romania somewhat bucks this trend, yet risks in the country's business environment bring down our overall rating.
|CEE Risk/Reward Rating, Scores out of 100|