Industry Trend Analysis - Challenging Outlook For Construction Sector To Weigh On CV Sales - MAR 2017

BMI View : We expect a challenging outlook for Mozambique ' s construction sector to create a poor outlook for the c ommercial vehicle segment , which will be further exacerbated by a weakening metical. As a result, we have downgraded our commercial vehicle sales forecast to a contraction of 13.5% in 2017, down from previously forecast growth of 6.6%.

We expect a challenging outlook for Mozambique's construction sector in 2017, combined with a weakening currency to weigh on demand for commercial vehicles (CVs) in the coming year. As a result, we are revising down our CV sales forecast to a contraction of 13.5% in 2017, down from previously forecast growth of 6.6%. From 2018, we expect the CV segment to start to recover and forecast average annual growth of 3.1% for the 2018-2021 period, down from a previously forecasted average annual growth of 4.3%.

Our downbeat outlook for the CV segment represents our Infrastructure team's view that the Mozambican government will struggle to deploy the capital needed to develop the country's construction sector with investors remaining on the sidelines following the 2016 debt scandal ( see ' ' ' Imminent Default Kicks Can Down The Road For Negotiations ' ' ', January 16 ; 'Government Debt Scandal Weighs On Infrastructure Outlook' , May 9 2016). Real growth in Mozambique's construction industry is forecast to grow 5.7% in 2017, and average annual growth of 6.5% over our 2017-2021 forecast period, according to our Infrastructure team. This represents a significant slowdown from average growth of 11.5% seen over the 2009-2014 period.

Downbeat Outlook For Construction Industry To Dampen CV Demand
Mozambique - Commercial Vehicle Sales, Units
e/f = BMI estimate/forecast. Source: BMI, INAV

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