That is how much global infrastructure spending may vary between now and 2020, depending on what macro-economic scenarios play out.
In dollar terms, a China hard landing would reduce CP&I expenditures by US$1.1 trillion between 2015 and 2020 (compared to the baseline).
In dollar terms, a global upturn would increase CP&I expenditures by US$600 billion between 2015 and 2020 (compared to the baseline).
We analysed 6 sectors and 7 regions worldwide covering 88% of global GDP.
The global outlook for capital projects and infrastructure (CP&I) spending remains positive over the long term. However, short-term volatility necessitates alternative strategies for growth - from prioritising projects for optimal value to striking the right balance between high and low-risk investments. The objective: to manage effectively through the short term while preparing for a more positive outlook longer term.
Watch this short video of Global Capital Projects and Infrastructure leader Richard Abadie discussing with Andrew Goodwin, associate director at Oxford Economics, two possible options for spending forecasts to 2020: a downside scenario with a hard landing for China, and a more optimistic global upturn scenario. Depending on which scenario plays out, global infrastructure spending could vary by as much US$2 trillion.
We believe it is more important than ever for companies affected by CP&I volatility to understand the potential range of possibilities they could face and be sufficiently agile to respond to conditions as they change. Our goal is to provide CP&I stakeholders with information and options for making the right decisions about capital expenditures.
The UK's recent decision to exit the European Union came after the research for this report was finalised. It is too early to comment on the specific UK and global impact of Brexit in 2020, however, in the short-term the additional uncertainty and volatility is likely to directly impact the UK CP&I market and indirectly impact the global CP&I market, although the latter is unlikely to be severe.
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Forecast looks at trends driving infrastructure spending and strategies for managing capital projects investments when growth is challenging. In a challenging economic environment, how can stakeholders build in agility to correct course swiftly?
Considering the range of possibilities that could impact capital project and infrastructure spending in the near term, stakeholders of all types – project owners, investors, governments, engineering and construction firms and multinational corporations – have tough decisions to make. We offer some possible options to consider for each type of stakeholder to help your organisation stay agile as you navigate an ever-changing business environment.
Peter Raymond, Global, Americas and Asia Pacific leader, Capital projects & infrastructure
In these economically and politically challenging times, CP&I CEOs acknowledge that they need to address greater expectations from wider stakeholders if they want to grow their business successfully.
Successful companies lay the groundwork by fortifying their physical, digital, and societal infrastructure before disaster strikes.
In this short animation, find out how PwC can help you manage your capital project successfully from strategy through to execution – and avoid becoming one of the 75% of capital projects that run over budget.