Global infrastructure will grow by 5% over next four years

Analysis released by global consulting firm PwC predicts that global spending on capital projects and infrastructure (CP&I) will grow by 5% a year within four years, doubling the low rates of growth of just 2% expected this year. The analysis by Oxford Economics, which examined spending across seven regions and six key infrastructure sectors, also projected that yearly global infrastructure spending would reach $5.3-trillion by 2020, up from an estimated $4.3-trillion in 2015, underlining the long-term strength of the sector.

Given the recent volatility in the market, the report also examined two scenarios against the baseline projection – a high growth recovery and a hard landing in the Chinese economy, given that China was the world’s largest CP&I market. On the baseline outlook, using projections for economic growth, though current spending was showing signs of CP&I growth, CP&I spend would remain low – around 2% – for the coming year.

PwC capital projects and infrastructure team member Richard Abadienoted that “even in these volatile times, there are still opportunities.” “Overall, growth for the region fell to 3.5 % in 2015, the lowest level in 15 years, and was set to decelerate further to 3% this year – well below the 5% to 7% range over the past decade, according to the International Monetary Fund’s ‘Regional Economic Outlook: Sub-Saharan Africa, 2016’ survey,” he said.

Although it showed the smallest overall spend on infrastructure, SSA was the fastest-growing regional infrastructure market, with a projected average increase in transport spending of over 11% a year from 2015 to 2025.

 “The overall need for infrastructure will not diminish. In addition, certain megatrends will continue to drive growth in infrastructure spend over the medium term. These include continuing global urbanisation, the growth of emerging economies, the rising middle class, technological innovation and resource scarcity,” commented Shaw.