POLICY: World needs $94 trillion spent on infrastructure by 2040

POLICY: World needs $94 trillion spent on infrastructure by 2040

August 09, 2017

Nearly a fifth of the $94 trillion in global infrastructure investment needed by 2040 risks being unfunded if current spending trends continue, the G20-backed Global Infrastructure Hub said on Tuesday.

To close the spending gap, annual infrastructure spending needs to rise to 3.5 percent from 3 percent of global gross domestic product, the GIH said in a report.

The report details how much each country needs to spend on infrastructure to 2040, which sectors need it the most and how they far they are from meeting these needs based on current spending trends.

"We believe this information will be key to governments, and indeed those organizations that fund, plan and build infrastructure projects into the future – and providing sustainable cities with social and economic benefits for all," GIH Chief Executive Chris Heathcote said.

The GIH, set up by the G20 in 2014, aims to help to increase opportunities for public and private investment in infrastructure around the world. It is funded by governments including Britain, Australia, China, Korea and Singapore.

Every year, $3.7 trillion needs to be invested in infrastructure to meet demand - equivalent to the annual economic output of Germany, the world's fourth largest economy.

And to meet United Nations Sustainable Development Goals, which aim to ensure universal access to drinking water and electricity by 2030, investment needs to increase to 3.7 percent of global GDP between now and 2030, it said.

 

The investment is needed to support global economic growth and fill gaps in infrastructure in both developed and developing countries, the GIH said.

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 30 percent of global infrastructure investment needs.

The report, which includes a deep study of 50 countries and seven industry sectors, was written by Australia-based GIH and Oxford Economics.

"(It) is a comprehensive and detailed analysis of infrastructure investment need. It gives the new country and sector spending data that governments and funding organizations have been calling for," Heathcote said.

Underpinning the need for increased spend is an expected rise in the global population by 2 billion people by 2040 and 46 percent increase in the urban population, driven by Asia, which needs $52 trillion in investment by 2040 to meet that demand.

Global infra investment need to reach $97 trillion by 2040 LONDON, UK // 25 July, 2017: 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.

The report, Global Infrastructure Outlook, 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.

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 ultimate achievement of the SDGs by 2030 is reliant on the provision of quality infrastructure.

On current trends, investment will fall substantially short of meeting SDGs for water and electricity.

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.

A G20 INITIATIVE 2 

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 is a comprehensive and detailed analysis of infrastructure investment need. It gives the new country and sector spending data that governments and funding organisations have been calling for,” says Global Infrastructure Hub CEO Chris Heathcote.

“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. “We believe this information will be key to governments, and indeed those organisations that fund, plan and build infrastructure projects into the future – and providing sustainable cities with social and economic benefits for all.”

The Outlook report and online tool can be found at: outlook.gihub.org

Peer review 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.

Reporting by Simon Jessop. Editing by Jane Merriman

 

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This article was originally published on REUTERS

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