Macroeconomic scenario and principal markets

The Salini Impregilo Group, established following the merger of two major Italian Groups, is a global player in the field of large-scale infrastructures. Therefore, the Group’s baseline scenario is the intercontinental market of large heterogeneous and composite infrastructures.

The lengthy macroeconomic recession experienced in the past 4-5 years, has affected almost all industrial and economic sectors. However, thanks to the limited volatility that characterizes the sector, the demand for large-scale infrastructures has not suffered a slowdown. As a matter of fact, complex infrastructures continue to represent a strategic priority for the growth of the national economies of most countries -- both industrialized and emerging.

In 2014, the global economy was still in a phase of transition, with a modest growth rate of 2.6%. The recovery was hindered by a number of different events, including the worsening of geopolitical conflicts in various parts of the world. In a number of countries, GDP growth was well below the rates that characterized the period before the financial crisis, with recovery times being extended as a result. Even though the most advanced economies – especially the Eurozone and Japan – are expected to see improvements in 2015 and 2016, there are still significant downside risks. The economies of developing countries saw opposing trends in growth rates in 2014, with a rapid slowdown in numerous countries including those of Latin America. In addition, a rising number of countries had to deal with structural imbalances and geopolitical tensions.

The global economy is expected to grow at a more robust, but still moderate, rate over the coming years, forecast to be 3.1% in 2015 and 3.3% in 2016. The slow recovery in employment levels and limited growth in wages and salaries remain one of the biggest problems to be tackled, especially since GDP growth continues to be below par in various parts of the world.

International prices for the main commodities have been on a downward trend for the past two years, with no expectation of a significant turnaround in 2015 or 2016. The price of oil fell sharply in the second half of 2014. This decline is expected to continue in 2015 and 2016, given the excess of supply over demand. Consequently, growth in trade has been very weak in the last few years, mainly because of the patchy recovery among the developed economies and moderate growth in developing economies. Global trade is estimated to have increased by 3.4% in 2014 – still well below pre-crisis levels.

One of the positive outcomes of 2014 is the continuation of relatively low interest rates, including in emerging countries, even if there is still a high risk of sharp adjustments and acute volatility. Expectations of capital flows remain fairly positive, both in emerging countries and in the more developed economies. Overall, net flows of capital are expected to be stable in 2015 and to increase slightly in 2016.

Low interest rates and the weakness of demand in the developed economies could provide the right conditions to encourage countries with infrastructure deficits to take up infrastructural development policies. Public investment in infrastructures is a key way to drive the recovery of aggregate demand, especially at times of economic crisis. In addition, these projects are usually very efficient because they focus on high-revenue initiatives. An increase in public infrastructure investments stimulates economic growth in the short term and can have a multiplier effect on long-term demand. In addition, the current monetary policy scenario characterized by falling interest rates can foster an ideal climate for the expansion of public investment in infrastructure.

Overall, despite the prevailing uncertainty over the future macroeconomic scenario and the ongoing recovery, companies with the necessary capacity and the right positioning will be able to take advantage of a number of encouraging signs – as mentioned above – by intercepting the demand for investment.