Global private investment in infrastructure projects in primary markets has been relatively resilient to pandemic shocks. The latest data show that investment in 2020 was a continuation of three prominent, pre-COVID trends:
- Stagnation in global private investment levels: Despite its resilience to the pandemic, private investment in infrastructure projects is not increasing and has remained stagnant for seven years running, and lower than it was 10 years ago.
Globally, we are not seeing the magnitude of investment growth needed to close the infrastructure gap. 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.
- Persistent gap between high-income countries and others: There are significant differences in private investment in infrastructure projects when comparing high-income countries to middle- and low-income countries.
High-income countries represent around 60% of global GDP, yet attract around three-quarters of all private investment in infrastructure projects. Furthermore, investment in these countries was unhindered in 2020. In fact, it increased slightly, by 2%. In contrast, middle- and low-income countries attract only a quarter of total global private investment in infrastructure, and the amount declined by 28% in 2020.
The decline in private investment in infrastructure projects in middle- and low-income countries started before the pandemic. Private investment in infrastructure in middle- and low-income countries as a share of GDP has declined since 2010, while it has remained broadly stable in high-income countries.
- Continued dominance of the renewables sector: In the midst of the pandemic, investors showed strong appetite for renewables. In 2020, the renewables sector attracted almost half of global private investment in infrastructure projects, mostly in wind and solar projects, and mostly in Europe and North America. The renewables share has been on an increasing trend over the past decade, rising from 21% in 2010 to a decade-high of 47% in 2020. This share is more than double the share of the second largest sector (transport) and almost five times the share of non-renewables (10%). The gap has been expanding since 2017 due to the continuous decrease in renewable energy costs and an increase in investments aligned with the Paris Agreement.
These are the three key trends characterising the global market for private investment in infrastructure over the past decade. While it is encouraging that investment in the sector has remained resilient and largely tracking as it did pre-pandemic, its stagnation in the last seven years remains a pressing issue for the infrastructure community to address.