Septembre 2024
InfraPPP & WAPPP (18 pages).
The number of PPP deals decreased by a negligible 4 units in the second quarter of 2024, despite more volatility on the economic front.
Firstly, developed countries saw a revamp of inflation, which led to a delayed start in the US Federal Reserve cutting cycle. Namely, the repricing of the FED policy stance and the appreciation of the dollar led many emerging markets to reconsider a more prudent approach to their monetary policy in an attempt to prevent currency devaluation occurrences. Support to inflation targeting was overall preferred to support to growth: with rates “higher for (slightly) longer”, investment plans clearly suffered.
Secondly, politics remains a global driver for volatility: a dense election calendar in key countries (India, Iran, Mexico and South Africa among others) lead to uncertainty on government transitions and fiscal policies. The heated political climax will continue in Q3 with the start of the US election campaign and snap elections in key countries like France and UK, potentially affecting the government’s investment plans and taxation structure thus further delaying the involvement of large constructors in offshore projects.
Thirdly, investors’ risk aversion was further tested by a spike in geopolitical tensions, with the intensification of the Gaza-Israel conflict which ultimately is taking a toll on maritime transport activity deviated from the Suez-Canal into longer cross-African routes. The impact affects PPP deals as projects based in the Red Sea area are now subject to higher geopolitical risk in case of conflict enlargement and governments benefit from slimmer receipts linked to cargo tariffs and harbor presence (first but not only Egypt).
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