Aug 07, 2014
Global infrastructure spend to hit $9-trillion by 2025 – reportBack
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The ‘Capital project and infrastructure spending: Outlook to 2025’ report analysed infrastructure spending across the 49 world economies that accounted for 90% of global economic output.
It covered five industry sectors – extraction, utilities, manufacturing, transport and social – and forecast their impact on seven major world economic regions, namely Western Europe, Latin America, Asia-Pacific, Middle East, sub-Saharan Africa, the Former Soviet Union and Central and Eastern Europe.
The Asia-Pacific market would represent nearly 60% of all global infrastructure spending by 2025, driven mainly by China’s growth, while Western Europe’s share would shrink to less than 10% from twice as much just a few years ago.
These paradigm shifts, together with a return to global growth were projected to drive significant spend for infrastructure worldwide for decades to come.
“Megacities in both emerging and developed markets – reflecting shifting economic and demographic trends – would create enormous need for new infrastructure. These shifts will leave a lasting, fundamental imprint on infrastructure development for decades to come.
Nigeria and South Africa dominated the infrastructure market, but other countries such as Ethiopia, Ghana, Kenya, Mozambique and Tanzania were also poised for growth.
Moreover, substantial increases in spending in the basic manufacturing sector were expected in sub-Saharan Africa, while yearly spend in the chemicals, metals and fuels sector was forecast to increase across the seven major African economies to $16-billion, up from about $6-billion in 2012.
From an estimated $7-billion in 2001, investment in infrastructure grew relatively consistently to reach $22-billion by 2012.
Transportation investment would likely grow to just short of $9-billion by 2025.
However, South Africa was likely to lose a share of regional spending relative to Nigeria, whose fiscal position and oil revenues would likely enable it to outperform South Africa over the coming decade.
Spend on capital projects and infrastructure was shifting to the emerging economies, particularly Asia, which were projected to increase from 28% in 2012 to 39% in 2018 and 47% by 2025.
The report also showed that spending on utility infrastructure was expected to be significantly stronger in countries that needed to upgrade deficient energy, water and sanitation services, and in economies that were rapidly urbanising, such as China, Ghana and Nigeria.
The greatest growth of spending for utilities was expected in sub-Saharan Africa, where a yearly rate of 10.4% between now and 2025 was forecast.
“Spending for electricity production and distribution is expected to rise from $15-billion in 2012 to $55-billion [in 13 years], while expenditures for improvements in water and sanitation services are forecasted to increase from $3.3-billion in 2012 to about $10-billion by 2025,” read the report.
Oil and gas extraction activity and infrastructure spending were expected to vary across countries and regions. Extraction spending in sub-Saharan Africa was projected to increase at 8% a year over the next decade, with the bulk of spending likely to take place in South Africa and Tanzania.
Ageing populations, especially in Eastern Europe and Japan, would necessitate more healthcare facilities, while emerging markets were projected to increase investments in healthcare and education for their young people.
“The yearly growth rate for social infrastructure spending is expected to be particularly strong – about 12% in sub-Saharan African where both schools and healthcare facilities will be in high demand,” it noted.
“It is crucial for policymakers, citizens and businesses to understand the factors that unlock infrastructure investment and development and to act responsibly and strategically within a long-term vision to create the right conditions for success.”
Edited by: Tracy Hancock
Creamer Media Deputy Editor Online
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