17:00 | 26/07/2017 Global Economy
(VEN) - A ground-breaking new report by the G20’s Global Infrastructure Hub (GI Hub) outlines infrastructure investment needs globally and individually for 50 countries and seven sectors to 2040, reveals the cost of providing infrastructure to support global economic growth and to start to close infrastructure gaps is forecast to reach US$94 trillion by 2040, with a further $3.5 trillion needed to meet the UN Sustainable Development Goals (SDGs) for universal household access to drinking water and electricity by 2030, bringing the total to $97 trillion.
Outlook, which can be accessed through an online tool, also reveals that $18 trillion – almost 19% – of the $97 trillion, will be unfunded if current spending trends continue.
Every year $3.7 trillion will need to be invested in infrastructure to meet the demands of an accelerating global population, the equivalent of the total annual GDP of Germany, the world’s fourth largest economy. And in order to meet the water and electricity SDGs, the investment need forecast increases by an additional $236 billion per year until 2030, when the goals are due to be met.
This is not just a major challenge for emerging countries that need to create new infrastructure, but also for advanced countries that have ageing systems that have to be replaced.
The United States will have the largest gap in infrastructure spending, at $3.8 trillion, while China will have the greatest demand, at $28 trillion, representing a massive 30% of global infrastructure investment needs.
The report suggests that Asia, excluding China, will invest US$19.7 trillion between 2016 and 2040 under current trends. This increases by 13% to US$22.4 trillion under the investment need scenario, or just under US$900 billion per year. Vietnam is forecast to meet 83% of its infrastructure investment needs. The largest gap is in the roads sector which requires an extra 70% in investment to meet forecasted needs. To meet SDGs, Vietnam needs a major increase in water investment. Total investment needs including SDGs almost double existing infrastructure investment trends.
Outlook also shows:
- By 2040, the global population will grow by almost two billion people – a 25% increase. Rural to urban migration continues with the urban population growing by 46%, triggering massive demand for infrastructure support.
- The world’s greatest infrastructure needs will be in Asia, which will require $52 trillion by 2040 to meet demand.
- Meeting the SDGs for electricity and clean water provision will require $3.5 trillion more than is currently needed to close infrastructure investment gaps.
- Closing the global investment gap will require annual infrastructure investment to increase from the current level of 3% of global GDP to 3.5%. Meeting SDGs will require this to increase further to 3.7% between now and 2030.
- The road and electricity sectors require the greatest spending as the global population becomes increasingly urbanised.
Outlook is a world leading project that includes a detailed analysis and online tool. It is the result of an intensive study of 50 countries and 7 industry sectors by the GI Hub and Oxford Economics, the leader in global forecasting and quantitative analysis.
“Outlook tells us three key things, how much each country needs to spend on infrastructure to 2040, where that need is for each infrastructure sector, and what their gap is, based on their current spending trends.
"Most significantly it advises governments and the private sector on where the greatest needs are, and how much should be spent to provide infrastructure for communities in the future” says Global Infrastructure Hub CEO Chris Heathcote
The Outlook report and online tool can be found at: outlook.gihub.org
|Outlook is the result of a year-long research partnership with Oxford Economics. The Global Infrastructure Hub acknowledges the contribution of peer reviewers: the International Monetary Fund, the European Bank for Reconstruction and Development, the Inter-American Development Bank, the Australian Treasury, University of Cape Town, and the Brattle Group.|