Australia leads the Asia Pacific (APAC) region in the potential to accelerate investment on public infrastructure works, says a new report by GlobalData.
Infrastructure investment in APAC had been substantial prior to the outbreak of the COVID-19 pandemic, with real infrastructure construction output recording a compound annual growth rate (CAGR) of 5.7 per cent between 2014 – 2019.
Growth in the region was driven primarily by emerging economies, which recorded growth of 7.6 per cent over the period, compared to a growth of 0.3 per cent in advanced economies.
However, following the onset of the pandemic, growth in many nations across the region collapsed. With economic prospects across much of APAC remaining uncertain in 2021, infrastructure investment will continue to play an important role in minimising the economic scarring inflicted by the pandemic, says GlobalData.
GlobalData’s report, ‘Prospects for Public Infrastructure Projects, Asia-Pacific’, assessed 19 economies in APAC, and found that Australia leads the region in the potential to accelerate investment on public infrastructure works.
Nations were evaluated, considering fiscal, economic, and political factors, and ranked according to a ‘Very Good’ to ‘Very Weak’ scale.
The report highlighted the strength of many economies in the region to accelerate their respective project pipelines, with the prospects of 10 nations assessed as ‘Good’ or ‘better’.
Unsurprisingly, the nation with the poorest prospects in the region is Myanmar, which has been wracked by political unrest since the February coup.
“Warranting Australia’s prime rating is its sizeable public infrastructure pipeline, equivalent to 22.2 per cent of GDP, of which 57 per cent is currently in the latter stages of development; Australia’s investment grade credit ratings and strong economic growth further enhance its ability to accelerate expenditure on public works,” Willis Rooney, Economist at GlobalData, commented.
“Recent political commitments to increase expenditure on infrastructure, such as the $15.2 billion increase outlined in the 2021 budget, further cement Australia’s ‘Very Good’ rating.”
Myanmar was assessed as the nation with the weakest prospects to accelerate public infrastructure works, with the South-East Asian economy being the only nation in APAC to be ranked as ‘Very Weak’. Influencing this assessment is the continuing civil unrest, a distinct lack of late-stage projects in the pipeline and the expectation of a sharp economic contraction this year.
“Unsurprisingly, fiscal positions across much of APAC have worsened considerably, with emerging nations being severely affected,” Rooney continued.
“Government debt and fiscal deficits have increased substantially, impacting the ability of many governments to finance further expenditure. As the pandemic persists, public finances will continue to tighten and the ability of governments to utilise public infrastructure investment to drive growth will continue to deteriorate.”
GlobalData is a data analytics and consulting company, headquartered in London, England. It provides expert analysis to 4,000 of the world’s largest companies, including over 70 per cent of FTSE 100 and 60 per cent of Fortune 100 companies.
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