Global Infrastructure Hub (96 pages).
Private investment in infrastructure projects in primary markets is not increasing, but it weathered the pandemic shock.
Mobilising private capital is key to closing the infrastructure financing gap and has become even more critical as the COVID-19 pandemic has further limited the investment capacity of governments. For the past seven years, private investment in infrastructure has remained stagnant, and lower than it was 10 years ago. The USD156 billion invested in infrastructure projects by private investors in 2020 represents 0.2% of global GDP, far shy of the 5% of global GDP (combining public and private investment) some studies indicate is required to close the infrastructure gap. It also pales in comparison to the USD3.2 trillion in infrastructure stimulus announced by G20 governments, identified in our InfraTracker (GI Hub, 2021).
The resilience of private investment in infrastructure projects to pandemic shocks is however a positive sign. While several sectors of the economy were significantly affected by the pandemic, private investment in infrastructure projects was resilient overall in 2020 compared to 2019.
High-income countries attract around three-quarters of all private investment in infrastructure projects. (To put this in perspective, high-income countries represent around 60% of global GDP and have about 50% of total public and private investment in infrastructure.) And despite severe disruption due to the pandemic, those volumes did not decrease in 2020. In contrast, private investment in infrastructure in middle- and low-income countries represents only a quarter of the total global private investment in infrastructure, and it declined by 28% in 2020.
Globally, lockdowns and restrictions in 2020 negatively impacted investments in the transport and energy sectors, while investment in the social and telecommunications sectors increased significantly – driven by the response to the pandemic and rise in online activities.
Even in the midst of the pandemic, investors showed strong appetite for renewables, with this sector attracting almost 50% of total private investment in infrastructure in 2020, mostly in wind and solar projects. However, it is notable that in high-income countries, almost 55% of the private investment in infrastructure projects went to renewable energy generation in 2020, while in middle- and low-income countries, that percentage was only around 20%, compared to over 25% for non-eenewable energy generation.