Unless the world’s leading economies change the way they currently fund their infrastructure needs, they are likely to spend less than half of the $60 trillion they need to invest in infrastructure through 2030.
That was the message delivered today by Norman Anderson, chief executive of Washington DC-based CG/LA Infrastructure at the outset of the consulting firm’s fourth annual global leadership forum in New York City.
You really don't see any evidence of us being able to satisfy the incredible growth in infrastructure demand needs that we're going to see going forward
“Given the current infrastructure development model, we’re likely to invest about $24 trillion between now and 2030,” Anderson said. CG/LA’s 2030 projections focus on 25 countries, including China, Brazil, India, the United States and Indonesia, among others, according to the firm’s website.
The Organisation for Economic Cooperation and Development (OECD), the economic policy group for the world’s developed countries, has forecast the world will demand cumulative infrastructure investments of about $60 trillion through 2030.
“There’s no way we’re going to invest that kind of money. That’s what we need,” Anderson said of the OECD’s estimate.
CG/LA predicted world economies could spend $42 trillion on their infrastructure needs through 2030 under a more optimistic scenario. Asia would account for nearly half of the $42 trillion, and China alone would account for about one-third, according to an executive summary of CG/LA’s predictions.
But even that figure, Anderson insisted, was unrealistic.
“If you think about it from an infrastructure business development guy’s point of view, it doesn’t make any sense at all,” he said, explaining that many of the world’s governments have yet to find ways to involve the private sector in the delivery of their infrastructure.
“You really don’t see any evidence for us being able to satisfy the incredible growth in infrastructure demand needs that we’re going to see going forward,” he added.
A survey of 300 senior infrastructure professionals showed that Anderson was the most bearish of all of them: 35 percent went for the $60 trillion figure, 39 percent opted for $42 trillion and another 14% percent guessed infrastructure spending would reach $34 trillion through 2030.
“Only a few people came near what I consider to be the right answer,” Anderson said.
Anderson cautioned that the underinvestment by the public sector would drive a “huge” opportunity for “creative” thinking about how to develop infrastructure. This could spell more opportunity for infrastructure investors and developers.
“One of the facts of the infrastructure business over the next couple of years, I think, is that there’s a huge opportunity because we’re going to have a lot less investment in infrastructure,” Anderson said.