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Report Highlights Infrastructure Spending Gap

Thursday, July 27, 2017

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According to a new report issued by the Global Infrastructure Hub, nearly a fifth of needed global infrastructure investment could go unfunded if spending forecasts hold true.

According to the G20-backed GIH, a total of $94 trillion will be needed to be invested in global infrastructure by 2040 to meet demand. Business Wire noted that the primary factors behind this need for increased spending include developing countries needing infrastructure, and advanced countries needing to replace aging systems. Other factors include an expected rise in global population by 2 billion people between now and 2040, and a 46 percent increase in urban population—driven in large part by growth in Asian countries.

As it stands, GIH says $3.7 trillion needs to be invested every year in order to meet the forecast demand. That's a figure equivalent of the annual economic output of Germany—the world’s fourth largest economy.

Frank Schulenburg, CC BY-SA 3.0, via Wikimedia Commons

Currently, the United States is forecast to have the biggest gap in infrastructure spending at $3.8 trillion.

For the current spending gap to be closed, annual infrastructure spending needs to rise from 3 percent to 3.5 percent of global gross domestic product, according to the GIH report.

The GIH Report

The GIH was established by G20 in 2014, with the goal to help increase opportunities in public and private investment in infrastructure across the globe. The new Global Infrastructure Outlook report from the GIH details how much countries will need to spend on infrastructure by 2040, what sectors are most in need of investment and how far individual countries are from meeting these needs.

"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 in a statement.

The endeavor is funded by governments, including those of Britain, Australia, Singapore and China.

SDGs and Investment Gaps

In order for United Nations Sustainable Development goals to be met—which involves ensuring universal access to drinking water and electricity by 2030—infrastructure spending needs to increase to 3.7 percent of global GDP between now and the deadline year.

China is slated to have the greatest infrastructure demand, at $28 trillion, which accounts for 30 percent of global infrastructure investment needs.

Juliancolton, CC BY-SA 4.0, via Wikimedia Commons

For U.S. roads and highways, the country would have to increase spending by about $3.4 trillion by 2040, and investment in rail would need to increase 33 percent annually over current spending.

Currently, the United States is forecast to have the biggest gap in infrastructure spending at $3.8 trillion. If things continue the way they are, the U.S. will only meet 69 percent of its forecast infrastructure need. For U.S. roads and highways, the country would have to increase spending by about $3.4 trillion by 2040, and investment in rail would need to increase 33 percent annually over current spending.

Infrastructure Investment

On the other hand, noted Business Wire, Germany, France and Canada share something in common: the lowest gap between forecast need and actual spending on infrastructure. All three countries show a less-than-2 percent spending gap.

Canada is forecast to see a 61 percent rise in GDP by 2040, and if the country’s current spending trends are continued, it is slated to meet 98 percent of investment needed for national infrastructure to keep pace.


Tagged categories: Funding; Infrastructure; Infrastructure; Spending

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