Insufficient infrastructure risks dampening global GDP

Outlook

The G20-sponsored Global Infrastructure Hub suggests that the world needs to invest 3.7 trillion dollars every year to 2040 to maintain, upgrade and expand infrastructure.

The burden falls heaviest on Africa, which needs to spend 6.2% of its GDP on infrastructure annually -- or 10% (double current spending) to meet the sustainable development goals of universal water and energy access by 2030. In absolute terms, Asia needs to spend nearly ten times as much as Africa, some 50 trillion dollars, but this will require only a modest increase to 4.5% of GDP from its current 4.0%.

The United States needs to spend over 2.2% of its GDP, more than two-thirds on transport, largely roads.

Impacts

• In the developed world, Italy’s needs are largest: lessons can be learned from August’s bridge collapse.
• If Germany, France and Canada keep spending at current rates, they will meet their needs.
• India needs to spend 2.2% of its GDP on energy, far more than it is spending; its telecoms, water and transport investment rate is adequate.
• The UN expects 68% of the global population to live in cities by 2050, up from 55%; urban investment and connectivity are key.
• Sovereign wealth funds could lead the private financing drive; they face fewer restrictions than pension funds and invest long-term.