The short-term outlook for El Salvador's construction and infrastructure market has improved slightly after the industry outperformed over much of 2019. Much of the growth achieved in the market is the result of the Fomilenio II programme, and as funding comes to an end over the coming years this will create a financing vacuum in the industry. While the government is looking to the public-private partnership model to attract investment, as well as foreign funding, particularly from Asian markets, the challenging business environment in El Salvador will continue to limit growth potential.
The short-term viewpoint for El Salvador's construction market remains broadly positive. Foreign development funding is driving forward a number of key projects and there is growing private investor interest leading to growth across the residential, transport and energy infrastructure sectors. That being said, with the Fomilenio II programme coming to an end in 2020, growth in the market is set to slow significantly as public spending capacity will be insufficient to maintain momentum. Additional risk factors, such as skilled labour shortages and the potential withdrawal of foreign aid from the US, could also deter investors from committing to the market.
The new governmental administration plans to develop five infrastructure projects in El Salvador under the Public-Private Partnership model, which would require an investment of approximately $545 million. The works of illumination of highways, the construction of a terminal of load and an administrative center, are some of the projects that the administration plans to tender and award, under the format of Public Private Partner.
Additionally, the construction of a stadium and the national library, as well as the development of infrastructure in tourist areas, are some of the projects that would be financed by the Asian giant in El Salvador, as part of its non-reimbursable cooperation programs in order to promote joint development and increase the well-being of both peoples, the Chinese Embassy in El Salvador announced.
Improvements made to airports, port, railroads and roads are as follow:
Monsenor Oscar Arnulfo Romero Airport:
La Union port
Communications (2017- CIA)