Posted By:Infra Bazaar
The global infrastructure construction market which was pegged at USD 3.1 trillion in 2016 is expected to reach USD 4.2 trillion by 2020. With the foresight of political fraternity and financial institutions bullish about making profits from infrastructure builds will certainly drive long-term sustainable growth.
Emerging economies such as in the Southeast Asian region are pivotal in driving the growth of infrastructure. Investment in water and irrigation, improvement transport and power sectors will foster the growth of a nation along with the human capital. Opening up of trade corridors and facilitating the movement of goods and people will also reduce trade costs. Mature economies too face challenges from ageing infrastructure, ageing population and changing demographics. As infrastructure ages, decisions need to made if refurbishment required or rebuilding is the best option.
China, India and other emerging Asian countries have been driving infrastructure spending in terms of spending percentage of their GDP, China spends around 18% of global GDP on its infrastructure, while 50% of global GDP is represented by Western Europe, the US and Canada, where ongoing infrastructure spending is recorded. Developed economies have far higher quality of infrastructure and less need to invest across all sectors. Western Europe, the US and Canada and Developed, Asia and Oceania might experience suppressed infrastructure growth till 2020. These regions might lose infrastructure market share from 38% to 34% over the next 5 year period. Developing nations will foster growth, led by China, India and other Southeast Asian regions.
China’s influence on global infrastructure is magnanimous; it can be seen just by the size of its market with a forecasted annual growth of 10.5% year on year till 2020. Other Emerging Asian players are also prospective as the remaining regions of the globe are facing reduced growth owing to either a mature economy or a developed infrastructure base. Economic issues are also coming on the way like rising public debt or declining growth in the commodities markets. African countries like Ghana and Ethiopia are expected to record faster growth in infrastructure till 2020, followed by Malaysia. Africa and the Middle East in particular are strong in terms of investment in railways. For example, Qatar is forecasted to grow by 25.2% on an average year on year till 2020, majorly driven by the Rail Integrated Network project which is currently underway in Doha at the cost of USD44.4 billion. It is expected to add 1,010km to an almost non-existent rail network.
Worldwide around 13000 large infrastructure projects are underway and collectively these projects are worth USD 14.2 trillion including both the public and private sector projects. With around 6,171 projects in the pipeline, the electricity and power sector leads sector, followed by roads, around 2,887 projects, railways around 1,641 projects, airports and ports around 1,237 projects, water and sewerage around 853 projects and some miscellaneous projects. In terms of US dollar value around USD 5.4 trillion are to be spent in power and electricity projects, around USD 5.2 trillion in railways, around USD 1.9 trillion in roads projects, around USD 1.2 trillion in airports and ports projects and around USD 421.5 billion in water and sewerage projects.
Several of these projects are in PPP mode, which would turn out to be a win-win situation for both public sector and private sectors companies. With so much in the pipeline and several other major projects coming our way like the Hyperloop, while another vehicle manufacturing company wants to solve the problem of failing infrastructure by taking to the skies, with the concept of flying cars, there is a lot more in store. Infrastructure companies must gear up for the challenge and take a paradigm shift in building up new technologies to take it up.