Global Infrastructure Outlook to 2023

Although the pace of growth in infrastructure investment is below that required to close the infrastructure gap, GlobalData forecasts that there will be an acceleration in the infrastructure investment growth in the coming five years (2019–2023) compared to that recorded in 2014–2018.

According to GlobalData, in the past five years, the value of global infrastructure construction grew by 3.2% on an annual average basis in real terms. This was led by Asia (North-East Asia grew at 5.4% and South and South East Asia grew at 6.8%) which has a massive population and is hungry for railways, roads and power stations. Currently in Southeast Asia, 50.9% of the population lives in urbanized areas, with the UN expecting this figure to rise to an average of 66.4% by 2050, where Asia’s population is expected to increase by 142 million, while in Europe the population is expected to shrink by more than 25 million over the same period.

At the other end of the spectrum, Latin America’s sluggish economic growth over the past five years has slowed infrastructure investment across critical sectors such as transport, energy, telecommunications, water and sewerage. The significant decline in commodity prices in 2014 meant that many countries in the region were unable to raise their investment in infrastructure development. At the same time, major corruption scandals, including the Lavo Jato (Car Wash) in Brazil, had a substantial negative effect on the overall construction industry. Over the past year, in some markets, mega projects were sacrificed as populist candidates turned existing projects into political platforms For example, Mexico’s new President froze a US$13 billion airport project that was already under construction. In other cases, fiscal prudence and concerns about project transparency have led to the cancellation of key projects. In the Middle East and North Africa region, project finance has not been immune to the impact of lower oil prices. Tightening fiscal positions across the region are contributing, in some cases, to project delays, rationalisation or even cancellations. The committee of the ministers of transport in the GCC decided to postpone working on the Gulf Railway Project from 2018 until 2020–2021.

Scope

An overview of the outlook for the global infrastructure construction industry to 2023

Analysis of the outlook for infrastructure investment in major global regions: North America, Latin America, Western Europe, Eastern Europe, South and South-East Asia, North-East Asia, Australasia, the Middle East and North Africa, and Sub-Saharan Africa.

Insight into the project pipelines for roads, railways, power generation, water and sewerage, marine and inland water infrastructure, and airports.

Key Highlights

There is widespread consensus among governments and businesses that increasing the quality of infrastructure is an imperative for economic growth, but countries on average continue to underinvest. According to World Economic Forum, worldwide investment in infrastructure is expected to be US$79 trillion by 2040. However, the actual global investment need is closer to US$97 trillion. To close this US$18 trillion gap, average annual global infrastructure investment would need to increase by around 23% per year. Most of this infrastructure gap is attributed to insufficient investment in the road and electricity sectors.

The pace of growth in North America’s and Europe construction industry will perform better in the forecast period than the previous forecast (2014-2018) albeit slower than emerging markets. Trump’s US$2 trillion US infrastructure plan will undoubtedly provide support for the overall growth of the region’s industry in the next five years. However, the successful implementation of the plan will hinge on how individual states and municipalities can respond, knowing that the federal government is contributing just US$200 billion to this 10-year program. To achieve the goal of US$2 trillion in infrastructure investments over the next decade, the bulk of funding to rebuild roads, bridges, waterways, energy projects, rural infrastructure, public lands and other projects would need to come from state and local governments or the private sector.

Electricity and power infrastructure will be the one of fastest sector in Europe as countries across Europe reaffirmed their commitment to advance the implementation of the Paris Agreement and intensify their cooperation on climate change and clean energy. Railway infrastructure will also positively affect the forecast.

GlobalData is currently tracking over 14,000 large-scale infrastructure projects (with a minimum value of US$25 million) worldwide, at all stages from announcement to execution. Collectively, these projects (from both the public and private sector) are worth US$14.8 trillion. With a total of 3,252 projects valued at US$3.2 trillion, South and South East Asia has the highest number of infrastructure projects

Reasons to Buy

Evaluate global and regional trends in infrastructure development from insight on output values and project pipelines. Identify the fastest growers to enable assessment and targeting of commercial opportunities in the markets best suited to strategic focus.

Identify the drivers in the global construction market and consider growth in emerging and developed economies. Formulate plans on where and how to engage with the market while minimizing any negative impact on revenues.