Source: GIH calculations based on IJ Global data.
*Note that 2021 figures are preliminary and are subject to upward revision as additional transactions are added to the database. This is particularly the case for Q4.
In 2020, several sectors were significantly affected by the COVID-19 pandemic. The global economy shrunk by 3.1% – its worst recession since the Great Depression of the 1930s, and the impact was even more acute in sectors such as tourism, where international tourist arrivals declined globally by an unprecedented 73%.
Although the infrastructure sector was not immune to the effects of COVID-19, our analysis shows that the impact on private investment in infrastructure was less significant than in other sectors. Private investment in infrastructure projects in primary markets – which includes greenfield and brownfield infrastructure, as well as privatisations – was resilient to the COVID-19 pandemic overall in 2020, with data indicating a continuation of pre-COVID, longer-term trends.
However, there were some sectoral differences within the wider infrastructure sector. Lockdowns and restrictions in 2020 negatively impacted investments in the transport and energy sectors, while pandemic control and online activities contributed to the increase in investment in the social and telecommunications sectors. Overall, global private investment in infrastructure projects fell by 6.5% in 2020 to USD156 billion.
In most years, the level of private investment in infrastructure projects is similar in Q1 through Q3 before picking up in Q4, as the financial closure of deals accelerates. This pattern remained in 2020, despite the pandemic. Although investment from Q1 to Q3 was relatively subdued and lower than that seen in the previous three years, it caught up quickly in Q4 – in fact, the acceleration in Q4 was the sharpest quarterly rise seen since 2016.
Preliminary data for 2021 suggest the resilience of private investment in infrastructure continued into 2021. While figures are subject to upward revision as more transactions are added to the database, they already show investment in the first three quarters of 2021 tracking at levels broadly in line with recent years.
The resilience of infrastructure amidst the pandemic storm attests to its attractiveness as an asset class. As the world seeks to emerge from the COVID-19 crisis, there is no better time to mobilise more private capital into sustainable, resilient, inclusive infrastructure.
