27 March 2024
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Infrastructure investment: a thematic overview

By Jeanne Walters

  • The world has substantial infrastructure investment needs, with a stock of ageing infrastructure across many advanced economies and a need for developing economies to invest in order to meet the Sustainable Development Goals (SDG) of access to clean water, basic sanitation, and electricity.
  • In addition, there are at least three other structural factors that will drive the need for further large-scale infrastructure investment, whether privately or publicly funded.
  • The first, and most widely publicised, is the global push towards decarbonisation. While global investment in energy transition reached a record high of USD 1.3trn in 2022, a significant spending gap nonetheless remains.
  • The second factor is a move towards increased regionalisation. This is being driven by rising negative sentiment toward globalisation, US-China trade tensions, and concerns about supply chain fragility.
  • The third factor driving the need for more infrastructure is the increasing digitisation of the global economy, which is likely to necessitate significant investment in physical infrastructure, including fibre-optic cables and data centres. 
  • Several large economies have made commitments to increasing investments in infrastructure in recent years, including the US passing the USD 1.2trn "Infrastructure Investment and Jobs Act" and significant investment spending under the EU's "Green Deal".
  • As argued in our GCC 2024 outlook, government spending supported growth in the region in 2023 and is expected to continue playing an important role in the near-to-medium term as countries look to achieve their ambitious development, diversification and net-zero targets.

  • Using project-level data, from MEED, we can gain a more detailed view of the scale of spending on large projects in the region. At the time of writing, the value of projects (both private and public sector) in execution in the GCC was over USD 572bn, with projects in the construction sector dominating. The value of projects currently in execution, is largest in Saudi Arabia and the UAE. 

  • Looking ahead there remains a sizeable pipeline of projects in the GCC. The bulk of these projects are however in a design or study phase, with a significantly smaller share in more advanced stages.

  • These pre-execution projects are weighted towards construction (34% share), transport (20% share) and power (15%). Roughly 50% of GCC projects in pre-execution phases are in Saudi Arabia, while 23% are in the UAE.

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Written By

Jeanne Walters Senior Economist

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