In addition to out-of-date electrical infrastructure, roads, railway lines, bridges, transit, water treatment plants and schools—all critical to our economic growth, global competitiveness, and quality of life—are suffering from years of underinvestment and a lack of coordinated planning.
And we’re not alone—many countries around the world are facing the same need for massive restoration and upgrades. In fact, experts predict that global investments in water infrastructure alone will total $1.2 trillion dollars through 2025, with most of the spending in Asia, followed by the U.S. and Europe.*
The good news is the problem is no longer being ignored. Actions in recent months include:
- The American Recovery and Reinvestment Act (ARRA)—which included the largest investment in America’s roads, bridges, transit lines and rail systems since the creation of the interstate highway system. Governors around the country are already sending ARRA-funded transportation projects out to bid.
- The National Governors Association’s recent winter meeting focused on their new initiative, Strengthening Our Infrastructure for a Sustainable Future. This is particularly notable since much of the infrastructure development falls to the states.
- The prevalence of public-private partnerships—especially for water infrastructure—is growing.
Given the long-term nature of many infrastructure projects, the allocated funding should provide a lift to related companies in the Industrials sector over the next few years. Machinery companies that build the heavy duty equipment and construction vehicles should benefit from the increase in infrastructure projects.
Construction and engineering companies that derive a significant portion of revenue from site development and construction of public-sector projects should enjoy increased demand as well.
*Source: OECD, IMF, Credit Suisse estimates