No Surprise On G20's Focus On Infrastructure
BMI View: The recent G20 meeting has once again seen infrastructure development being touted as a means of boosting economic activity, with a drive to increase private sector participation in infrastructure development central to that. This does not come as a surprise to us but we highlight that it remains to be seen if the G20's plans for driving infrastructure development will be implemented effectively.
The recent meeting between finance ministers and central bankers from 20 of the world's largest economies (or the G20) has once again seen infrastructure development being touted as a means of boosting economic activity. During the meeting, the G20 authorities agreed to boost their collective GDP by more than 2% over the next five years. To achieve this target, the G20 countries, with the assistance from a private sector taskforce (known as the B20), will formulate individual action plans, setting out concrete reforms across a variety of policy areas. The B20 taskforce is expected to provide recommendations to G20 leaders in July 2013, after which these plans will be finalised during the G20 summit in November 2014.
It comes as no surprise to us that infrastructure investment remains a favoured means to boost economic activity among the G20 members. Fixed asset investment remains one of the easiest ways to generate a satisfactory economic growth rate in the near term. While there has been a surge in infrastructure build-up in the years after the global financial crisis in 2008-09, many G20 economies, particularly the emerging economies, still suffer from sizeable infrastructure deficits.
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