Canada looking good on infrastructure as global spending must hit US$97T by 2040: Report
The report on global infrastructure requirements says Canada is well positioned to have one of the narrowest gaps between need and spending, while the U.S. will have the widest gap
LONDON—The G20’s Global Infrastructure Hub (GI Hub) says the cost of providing infrastructure to support global economic growth and start to close infrastructure gaps is forecast to reach US$94 trillion by 2040.
A further $3.5 trillion is 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.
The Global Infrastructure Outlook report reveals that $18 trillion, almost 19 per cent 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 goals, 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 must build new infrastructure, but also for advanced countries that have ageing systems that have to be replaced.
The U.S. 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 per cent of global infrastructure investment needs.
The ultimate achievement of the SDGs by 2030 is reliant on the provision of quality infrastructure. The report says investment will fall substantially short of meeting SDGs for water and electricity.
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 per cent 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 two per cent. Canada is expected to see a 61 per cent 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 per cent increase in US GDP from 2015 through 2040, the US is expected to meet only 69 per cent of its infrastructure need based on current spending trends. Outlook projects that spending on U.S. 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 per cent annually (above the current trend).
Outlook also shows:
• By 2040, the global population will grow by almost two billion people. Rural to urban migration continues with the urban population growing by 46 per cent, 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 three per cent of global GDP to 3.5 per cent. Meeting SDGs will require this to increase further to 3.7 per cent between now and 2030.
• The road and electricity sectors require the greatest spending as the global population becomes increasingly urbanised.
Outlook is the result of a study of 50 countries and seven industry sectors by the GI Hub and Oxford Economics, the leader in global forecasting and quantitative analysis.
“Outlook is a comprehensive and detailed analysis of infrastructure investment need. It gives the new country and sector spending data that governments and funding organisations have been calling for,” says Global Infrastructure Hub CEO Chris Heathcote.
“Outlook tells us three key things, how much each country needs to spend on infrastructure to 2040, where that need is for each infrastructure sector, and what their gap is, based on their current spending trends.
“Most significantly it advises governments and the private sector on where the greatest needs are, and how much should be spent to provide infrastructure for communities in the future,” said Heathcote.