New Citi Report: Infrastructure – the $59-trillion opportunity to kickstart global growth
October 20 2016 - 2:00AM
Business Wire
Report finds that every 1% increase in infrastructure investment
is associated with a 1.2% increase in GDP growth
In a report issued today, Citi highlights the opportunity for
both the private and public sector to increase global investment in
infrastructure. Despite ageing infrastructure in developed markets,
and a desperate need for infrastructure in emerging markets,
declining percentages of GDP are being spent on infrastructure
globally.
With global economic growth remaining sluggish and the monetary
policies of near-zero interest rates and QE running out of steam,
infrastructure investment offers a form of fiscal stimulus which
could boost growth, create jobs, provide attractive returns for
investors in this yield-starved environment, and simultaneously
perform a valuable social good. In examining historic spend across
the asset class, Citi estimates that every 1% increase in
infrastructure investment is associated with a 1.2% increase in GDP
growth.
The Citi GPS report, entitled “Infrastructure for Growth: The
Dawn of a New Multi-Trillion Dollar Asset Class,” estimates a
global need for infrastructure spending of $59 trillion over the
next 15 years, presenting an immense opportunity for private sector
investment. Along with identifying a source of long-term stable
cash flows and income for investors, the report also addresses the
pressing social need for global infrastructure investment
particularly in emerging markets, as millions globally are living
without electricity or clean drinking water.
“Policy makers are running out of monetary levers to pull,” says
report lead author Jason Channell, Managing Director, Citi
Research. “It’s incumbent on the private sector to help facilitate
infrastructure spending, which can boost growth by both short term
demand effects, and longer term supply effects. We need to bridge
the gap between private capital wanting to invest, what
cash-strapped governments can feasibly afford, and the desperate
need for a global improvement in infrastructure, by creating a new
and liquid global asset class.”
Despite virtually unanimous support for infrastructure
improvement, the report details a myriad of challenges preventing
the roughly $200 trillion global equity and credit markets from
filling this need. The main hindrance is a lack of bankable
projects, a mismatch of risk perceptions and an immature,
fragmented and relatively disorganized industry.
To address this, Citi calls for making infrastructure a more
accessible asset class—one that allows investment within a liquid
and transparent market—and the need for a central source of data to
anchor it. Citi also highlights key themes, projects and
opportunities available in markets including The United States,
China, United Kingdom, India and Brazil across the four major
subcategories of water, energy, telecoms and transportation.
About Citi GPS
As Citi’s premier thought-leadership product, Citi GPS: Global
Perspectives & Solutions is designed to help the firm’s clients
navigate the global economy's most demanding challenges, identify
future themes and trends, and help them profit in a fast-changing
and interconnected world. Citi GPS accesses the best elements of
the global conversation and harvests the thought leadership of a
wide range of senior professionals across Citi. To learn more about
Citi GPS and view other recent reports, please visit:
https://www.citivelocity.com/citigps/.
About Citi
Citi, the leading global bank, has approximately 200 million
customer accounts and does business in more than 160 countries and
jurisdictions. Citi provides consumers, corporations, governments
and institutions with a broad range of financial products and
services, including consumer banking and credit, corporate and
investment banking, securities brokerage, transaction services, and
wealth management.
Additional information may be found at www.citigroup.com |
Twitter: @Citi | YouTube: www.youtube.com/citi | Blog:
http://blog.citigroup.com | Facebook: www.facebook.com/citi |
LinkedIn: www.linkedin.com/company/citi.
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version on businesswire.com: http://www.businesswire.com/news/home/20161020005199/en/
Citi Public AffairsTroy Underhill,
416-947-5687troy.underhill@citi.comorSusan Monahan, +44
207508-0786susan.monahan@citi.com
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