CEE Jul-Sep-2012

When it comes to adding capacity in 2012, it has followed a largely expected trajectory, though with a temporary hesitation in some markets such as India. Generally, Africa and parts of Asia and Latin America are seeing the biggest capacity additions in the next few years. Furthermore, several countries will struggle with low utilization rates (below 50% of actual cement production output over total cement capacity, as opposed to only considering consumption over capacity that many in the global cement sector erroneously track). The countries that are seeing some of the greatest challenges include Greece, Spain, Bulgaria, Hungary, Iraq (though admittedly more driven by maintenance issues), Jordan and the UAE. In 2012, the regions of Asia, Latin America, and the Middle East will keep pace with the global cement consumption average of six per cent. The North American and Western European regions will fall well below growth expectations, while Africa's consumption growth will moderate at only four per cent. Barring additional macro-economic shocks to a fragile global economic system, by 2013, the CW Group expects that global cement demand will be close to 4 billion tonnes with China representing about 59 per cent of the total tonnage. Construction Sector Analysis World Economic Global outlook, policies and expectations World Economic Outlook Report released by International Monetary Fund (IMF) remarks that global economy is threatened by intensifying strains in the euro area and the most immediate policy challenge is to restore confidence. Global output is projected to expand by 4 per cent in 2012 according to the September 2011 World Economic Outlook (WEO) and then a downward revision of this forecast is realized by 3.3 per cent. For 2013, growth of global economy is estimated by 3.9 per cent. Forecasts of IMF regarding growth in the euro area are 1.1 per cent for this year and 1.5 per cent for the next year. However, January 2012 reviews of these projections show recession by 0.5 per cent in this year and growth by 0.8 per cent for the next year. Consideri ng EU region as a whole, economy is forecasted to contract by 0.1 per cent. For Asian countries, relatively optimistic forecasts issued by IMF indicate growth by 8.2 per cent in China and by 7 per cent in India. Also expected growth in Latin America is 3.6 per cent. According to IMF, previous projects with respect to the growth in USA by 1.8 per cent remains at stand-still , on the other hand, forecasted growth in Japan by 2.3 per cent falls to 1.7 per cent. Possible growth rate for Middle East and North Africa in 2012 is 3.2 per cent, in addition, Sub-Saharan Africa is expected to grow by 5.5 per cent. Future Outlook Finding out the question, "What is expected for Turkey in 2012?" It is plausibly required to identify strong and weak points of economy and then to evaluate possible effects of political situation in the Middle East and financial conditions in Europe. Strength of national economy is to have a "balanced budget" and the ratio of public debt to GOP is for behind many European countries struggling with debt crisis. This makes Turkey more fascinating for the inflow of external resources. Additionally, dependence of growth on external resources, hot cash flow, foreign capital, external debt and applications of high interest-low exchange rate policy cause fragile economy. The fact that high amount of external debts owed by private sector climbs over 300 billion Dollars and huge amount of the debt is to be paid within short term are the other aspects giving rise to the problem. Construction industry During 302011, the size of construction industry reached over 15 billions Dollars. In Q3 growth rate of the industry was realized by 10.6 per cent, a rate slightly lower than 13.4 per cent posted in Q2 of the year. This situation has arisen from 3 factors; base effect, seasonal sector activities and investors' tendency towards completing current project rather initiating new investments, in addition, investors' inclination for disinvestments especially in construction sector. Despite the decrease in building permits, increasing floor areas of Building use permits supports the opinion above. In terms of floor area, building permits declined by 21.58 per cent while floor area of building use permit rose by 31.93 per cent in September 2011 compared to data in September 2010. This scenario highlights cautious side of this industry for the long run investme!lts. During the first 9 months, floor area of buildings permitted fell by 8.3 per cent and floor area of buildings with building use permits pushed up by 27.8 per cent. Housing keeps its place on the top of constructions permitted with rate of 58. 1 per cent. Foundations of growth -Russia Russia represents one of the worlds' largest and fastest growing cement industries. The cement sector has outpaced the growth rates of other prominent industries in the country on the back of various growth enablers, such as increased activity 38