Capital projects and infrastructure spending trends: Key findings

Sector highlights
US expected to boost share of world oil & gas extraction to 17% by 2017; Canada’s share slips
Austerity measures likely to reduce social infrastructure spend in some advanced economies
Transportation projected to grow at average annual rate of about 6% in next decade
Utilities spending expected to grow, especially in Sub-Saharan Africa & Middle East
About 20% of 49 countries studied are rapidly urbanising. See where.

Capital project and infrastructure spending trends in the sectors

What are the capital project & infrastructure spending trends in the extraction, manufacturing, social, transportation and utilities sectors? Explore the key findings here.

Extraction

The extraction sector boosted its share of the global infrastructure market to 17% in 2013, up from 14% in 2006, with most of the growth occurring in non-oil and gas extraction. The US is expected to boost its share of world oil and gas extraction to just short of 17% by 2017, while Canada’s share of output is expected to slip from 7.5% to 7%.

In Latin America, extraction sector spending should reach more than $140 billion by 2025, with Brazil expected to gain about 30% of additional extraction output. Meanwhile, the Middle East is expected to account for 35% of infrastructure spending in the region by 2025, and extraction spending will continue to grow in Asia Pacific, especially in China and Australia.

In the former Soviet Union, extraction sector activity will also remain quite strong, while extraction sector spending will be negligible in most of Central and Eastern Europe, except in Poland, where spending is expected to increase by more than 9% a year over the next decade.

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Manufacturing

The manufacturing sector—petroleum refining, chemicals, and heavy metals—is set to grow at annual rate of 8% worldwide between now and 2025. By then, manufacturing will represent 21.3% of global infrastructure spending, up from 18.8% in 2012.

In Western Europe, however, capital spending in heavy manufacturing will likely grow by only 1% to 2% a year, while in North America, an annual growth rate of 5.6% is forecast over the coming decade, thanks to lower energy prices and geographic advantages. Meanwhile, in the Asia Pacific region, infrastructure spending in metals, chemicals, and fuel refining is forecast to grow at a robust annual rate of 9.3% over the coming decade, and as countries in Sub-Saharan Africa continue to develop, a substantial spending increase is expected.

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Social

Over the near term, spending on social infrastructure is likely to dip in some advanced economies because austerity measures will curtail government spending. Longer term, though, social infrastructure’s share of the global market should rebound as both advanced and emerging countries’ governments boost their spending. Overall, demographics will play a key role in the allocation of social infrastructure spending, with young populations, such as the Middle East, needing more schools and aging countries/regions, such as Italy, Spain, Germany, Latin America and the Asia-Pacific, putting more money into healthcare facilities. Regions that have both young populations and more health challenges, such as Sub-Saharan Africa, are expected to increase spending in both education and health.

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Transportation

Transportation, which accounts for roughly 22% of global infrastructure spending, is projected to grow at an average annual rate of about 6% worldwide over the coming decade, with more spending expected in emerging economies than developed ones. Increased prosperity will boost spending in Latin America, Asia Pacific and Middle East markets as car ownership booms. Canada, which enjoys healthier government finances than the US, will see more road and rail spending than its southern neighbor. In Western Europe, two more years of transportation spending decline is expected before a gradual recovery later in the decade, but the priority for most governments will remain rebalancing public finances.

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Utilities

Spending on utility infrastructure will be especially strong in countries that need to upgrade deficient energy, water, and sanitation services and in economies that are rapidly urbanising, such as China, India, the Philippines, Indonesia, Ghana, and Nigeria. The greatest growth rate for utilities spending is expected in Sub-Saharan Africa, while spending in the Middle East is expected to double.

But even in the developed nations of Europe, utilities spending will likely be more robust over the coming decade. Meanwhile, in the former Soviet Union and Central and Eastern Europe, many countries still need to improve the reliability and quality of energy, water, and sanitation services. Increased spending is already well under way in some countries, such as Russia, but spending has remained stalled in other countries, such as Ukraine, where future spending will depend in large part on government financing and broader economic growth.

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