KPMG finds Eastern Europe set for transport boom …

Eastern bloc countries are to become a rapidly growing market for transport infrastructure over the next five years, according to a report from accountant KPMG.

Countries identified as “tiger” economies by the authors of the report include Bulgaria, Estonia, Latvia, Lithuania and Romania. Iceland is also on the list. These nations spent relatively little in 2006 – the latest available figures – but KPMG says they are on course for annual growth of up to 7% over the next five years.

The research, the first of a series of investigations into global infrastructure markets, looks at past investment in areas such as road and rail in 30 European countries in order to calculate expected growth rates.

The 7% growth rate would make, for example, Romania’s spend in the area €760m (£604m) in 2012, compared with €578m in 2008, and Bulgaria €175m, compared with €139m at present.

Kai Rintala, KPMG’s head of infrastructure intelligence, authored the report. He said: “The numbers effectively confirm what we knew already. But now people are able to make strategic decisions about which markets to be in over the next five years with greater confidence.”

The UK is included among the five biggest European investors in infrastructure, along with France, Germany, Italy and Spain. Together, they are expected to account for 67% of Europe’s total investment in this area over the next five years. The UK alone spent €7.7bn (£6.1bn) on new transport infrastructure in 2006 and is expected to spend about €43bn (£34.2bn) up to 2012 as it gears up for the Olympics and manages major schemes such as the Thameslink and M25 upgrade.

The numbers effectively confirm what we knew already

Kai Rintala, KPMG

However, the report says the five big spenders are “large and mature” markets, where growth rates are sluggish. Forecast growth for the sector in all five is below 4% a year, with the UK at 3% and Germany at just 0.3%.

However, after adjustment based on local intelligence, such as anecdotal evidence and expected political stability, Spain is forecast to have rapid medium-term growth.

Poland, Portugal and Slovakia are also given tiger status after this type of adjustment.

The most heavily populated category in the report is “small and mature” markets which includes 19 countries such as Austria, Belgium, Finland, Greece and Switzerland.

See tables attached below.