Infrastructure investment is best way to avoid austerity says World Bank

Infrastructure is a key driver for economic prosperity and austerity is not the only way forward, said Dr Henry Kerali, regional director at the World Bank, speaking at today's ACE International Conference in London.

Speaking to delegates at the opening session of third annual ACE event for firms working internationaly, Dr Kerali outlined the Bank’s forecast that from 2018 world growth will pick up to 3%. He grabbed delegates' attention by making a passionate case for the role of infrastructure as a key driver for economic development, saying that infrastructure development was the best way to avoid austerity. “Infrastructure boosts employment directly and indirectly and it is needed worldwide,” said Dr Kerali. 

“Currently the global infrastructure gap internationally is $800 trillion. That’s with a T not a B! Much of the infrastructure investment will come from countries themselves but much will need to come from the private sector,” he said. “We see infrastructure development as one of the key avenues to boosting prosperity around the world. Austerity is not the only path,” said Dr Kerali.

Aspirations for growth from countries across the globe are fuelling the demand for infrastructure across countries, says the World Bank. Countries view the availability and reliability of infrastructure services as critical to private sector growth and firms’ competitiveness in domestic and international markets. The 2008 global crisis also showed the significance of public spending in infrastructure as a powerful countercyclical instrument to withstand recessions, say the Bank.

The opening session on the global economy also heard from professor Lawrence Saez, co-director at the  Centre for the Politics of Energy Security at SOAS, who highlighted the increasing role of the Chinese state in providing unrivalled financial support for investment in infrastructure. However, he warned that China will face adversity and challenges in the future as its economy transitions and current levels of investment might not be maintained. 

The comments from the World Bank on the importance of infrastructure investment will be welcomed by the industry as further evidence of the crucial role that the sector can play in driving global economic development and prosperity.