BMI's Executive Summary

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Having grown at a whopping 13.6% year-on-year (y-o-y) in 2006, the Latvian construction industry is among the fastest growing in the Balkan region. The country's membership to the European Union (EU) has created tremendous opportunities in the infrastructure space. BMI forecasts the Latvian construction industry to grow at 9.6% on average during 2008-12.

The year 2007 has also turned out to be extremely beneficial for the industry, with total volume of construction rising 16.2% y-o-y during the first half of the year. A number of construction projects are planned or currently under way in the country across all sub-sectors. These include reconstruction and expansion of Riga's international airport, a highway upgrade programme and the Northern Corridor projects. Continuous improvement in living standards and easier access to credit are likely to spur residential demand. Although the country is a net importer of electricity, there are no threats associated with power availability. The country, along with its neighbours in the Balkan region, has been aiming at self- sufficiency in power generation.

There are currently about 12 large players in the Latvian construction industry. The country's membership of the EU has made it easier for foreign players to bid for major projects. Construction costs in the country have been escalating, fuelled primarily by rising salaries in the construction business. The increase in salaries has, in turn, been influenced by migration of skilled labour to other EU nations in search of better opportunities. On the economic front, a number of reforms have taken place, with support from the EU. On the flipside though, the Latvian economy has had to bear widening trade deficits and mounting inflationary pressures.

The Latvian infrastructure sector is among the country's most dynamic, and government expenditure on infrastructure has been rising steadily. The industry is forecast to be worth LVL1.40bn (US$2.61bn) in 2012, making up 7.22% of the year's GDP.

Contents

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Chapter 1 – Industry Trends And Developments

Market Overview

Latvia's Economy In 2006

Latvia's Construction Industry In 2006

Major Companies

Recent Investment Initiatives

Chapter 2 – Key Projects

Transport

Utilities

Tourism

Residential And Commercial Construction

Table: Latvia — Major Infrastructure Projects

Chapter 3 – Business Environment

Introduction

Table: Emerging Europe Business Rankings

Business Attractiveness Rankings — Methodology

Regional Overview

Latvia: Business Environment Ranking

Economics — Long–term Risk

Politics — Long–term Risk

Construction Growth

Competitive Environment

Anticipated Potential

Chapter 4 – SWOT Analysis

Latvia Infrastructure Industry SWOT

Chapter 5 – Industry Forecast Scenario

Table: Latvia Infrastructure

Risks

Chapter 6 – Macroeconomic Outlook

Table: GDP, Output And Population

Chapter 7 – Country Snapshot: Latvia Demographic Data

Section 1: Population

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education ('000)

Table: Healthcare — Vital Statistics

Table: Healthcare — Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption And Stratification

Table: Wages Per Annum

Chapter 8 – Competitive Landscape

Table: Latvia Infrastructure Key Players

Chapter 9 – Company Monitor

Kalnozols Celtnieciba

LEC

Skonto Buve

RBS Skals

Chapter 10 – BMI Forecast Modelling

How we generate our Industry Forecasts

Construction Industry

Sources

Chapter 11 – Appendix: Regional Demographic Data

Wages (ave labour force per annum), US$ PPP

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, US$bn

Competitive Landscape for Europe Infrastructure Reports: Sample of Companies Ranked

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Comparative company analyses and rankings by sales, % market share, employees, registration date and ownership structure. Company profiles include fully researched senior executives and contact details, business activity and leading products and services. SWOT (strengths, weaknesses, opportunities, threats) of the state’s business environment, infrastructure sector, politics and economics, which carefully evaluates the short- and medium-term issues facing the industry.

Network of European Infrastructure Sources

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BMI's European Infrastructure Reports are based on an extensive network of multilateral organisations, government departments, infrastructure industry associations, chambers of commerce and company reports. Information sources include: