In a recent visit to Brazil, the director of the Global Infrastructure Hub (GI Hub) Daniel Fedson was amazed by the country’s poor infrastructure situation. “The gap in the country is enormous, as half of the fundamental works in this area are yet to be done,” he said.
The Global Infrastructure Hub (GI Hub) was launched in 2014 with a G20 mandate to increase the flow and the quality of opportunities for public and private infrastructure investment. We work to facilitate a better supply of quality, bankable government infrastructure projects to the private sector, identifying reforms, planning approaches and risk management strategies that drive public-private partnership and investment into infrastructure.
It aims to be a leading reference on infrastructure best practices, providing innovations that enhance the market’s ability to finance, build and secure the best returns from infrastructure projects.
US to have the largest funding gap; Canada among the lowest
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. 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 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.
The ultimate achievement of the UN’s Sustainable Development Goals (SDGs) is reliant on the provision of quality infrastructure. On current trends, investment will fall substantially short of meeting SDGs for water and electricity by 2030.
GDP growth and rising populations in urban environments are driving the need for investment in infrastructure globally. By 2040, global GDP is forecast to double from 2015 levels and the population of our cities will swell by 46% on average. The response to this demand differs dramatically by country. In Germany, France and Canada, the gap between the forecast need and spending on infrastructure is the lowest in the world – less than 2%. Canada is expected to see a 61% rise in GDP by 2040 but if it maintains current trends in investment, it is forecast to meet 98% of the investment needed for its infrastructure to keep pace.
GDP growth can provide the economic investment to fund infrastructure; however, despite a 50% increase in US GDP from 2015 through 2040, the US is expected to meet only 69% of its infrastructure need based on current spending trends. Outlook projects that spending on US roads and highways will have to increase US$3.3 trillion by 2040 to meet the forecasted need, and that investment in rail will need to increase 33% annually (above the current trend).
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. (PR Newswire)