Top Five Markets For Fixed Investment
BMI View: The Asia Pacific region will see very strong growth in fixed capital formation (FCF) over the next decade. While the bulk of the project pipeline in value terms will continue to sit in a few countries such as China, India and Australia, we forecast the fastest average growth rates in FCF to occur in the Philippines, Indonesia, India and Malaysia over the next five years.
We believe that the Asia Pacific region presents huge opportunities for fixed investment and forecast the region to see very strong growth in fixed capital formation (FCF) over the next decade. This is because many countries still face significant infrastructure deficits and their respective governments remain keen to address these deficits. That said, we expect Asia's share of global fixed capital formation (FCF) to peak at 45.0% in 2016 and decline over the next decade. The large surge in Asia's share since 2007 was largely due to a collapse in FCF in developed markets during the financial crisis, combined with large government-targeted investment projects in Asia, China being a case in point.
This strong potential for fixed investment opportunities in Asia is reflected in our Infrastructure Projects Database. Looking through our database, we note that approximately USD4.9tn worth of projects have been announced for the region, with the bulk of them going to China, India, Australia and Indonesia. Although these figures are subject to substantial revision (details are scarce for some projects, project values may be updated, projects may be added, or cancelled, etc) it illustrates that there are significant project opportunities in the transport, energy and utilities sectors as these countries prioritise infrastructure development.
|Asian Share of FCF To Decline|
|Asia - Fixed Capital Formation & GDP As a Share of Global (%)|