Infra needs in developing Asia, the Pacific will exceed $22.6 trillion through 2030: ADB
Infrastructure needs in developing Asia and the Pacific will exceed $22.6 trillion through 2030, or $1.5 trillion per year, if the region is to maintain growth momentum, according to a new flagship report by the Asian Development Bank (ADB) on Tuesday.
The estimates rise to over $26 trillion, or $1.7 trillion per year, when climate change mitigation and adaptation costs are incorporated.
“The demand for infrastructure across Asia and the Pacific far outstrips current supply,” said ADB President Takehiko Nakao. “Asia needs new and upgraded infrastructure that will set the standard for quality, encourage economic growth, and respond to the pressing global challenge that is climate change.”
Infrastructure development in the 45 countries covered in the report has grown dramatically in recent decades ? spurring growth, reducing poverty, and improving people’s lives.
But a substantial infrastructure gap remains, with over 400 million people still lacking electricity, 300 million without access to safe drinking water, and about 1.5 billion lacking access to basic sanitation.
Many economies in the region lack adequate ports, railways, and roads that could connect them efficiently to larger domestic and global markets.
“ADB pledges to work with member countries and use our 50 years of experience and expertise to meet infrastructure needs in the region. As the private sector is crucial to fill infrastructure gaps, ADB will promote investment friendly policies and regulatory and institutional reforms to develop bankable project pipelines for public-private partnerships,” said Nakao.
Developing Asia will need to invest $26 trillion from 2016 to 2030, or $1.7 trillion per year, if the region is to maintain its growth momentum, eradicate poverty, and respond to climate change (climate-adjusted estimate). Without climate change mitigation and adaptation costs, $22.6 trillion will be needed, or $1.5 trillion per year (baseline estimate).
Of the total climate-adjusted investment needs over 2016-2030, $14.7 trillion will be for power and $8.4 trillion for transport. Investments in telecommunications will reach $2.3 trillion, with water and sanitation costs at $800 billion over the period.
East Asia will account for 61 percent of climate-adjusted investment needs through 2030. As a percentage of GDP, however, the Pacific leads all other sub-regions, requiring investments valued at 9.1 percent of GDP. This is followed by South Asia at 8.8 percent, Central Asia at 7.8 percent, Southeast Asia at 5.7 percent, and East Asia at 5.2 percent of GDP.
The $1.7 trillion annual climate-adjusted estimate is more than double the $750 billion ADB estimated in 2009. The inclusion of climate-related investments is a major contributing factor. An even more important factor is the continued rapid growth forecasted for the region, which generates new infrastructure demand. The inclusion of all 45 ADB member countries in developing Asia, compared to 32 in the 2009 report, and the use of 2015 prices versus 2008 prices also explain the increase.
Currently, the region annually invests an estimated $881 billion in infrastructure (for 25 economies with adequate data, comprising 96 percent of the region’s population). The infrastructure investment gap ? the difference between investment needs and current investment levels ? equals 2.4 percent of projected GDP (climate-adjusted) for the 5-year period from 2016 to 2020. DMS