Chief Executive Officer at Global Infrastructure Hub
Over the past 20 years, Commonwealth countries have led the world in creating partnerships between the public and the private sector to deliver public services, through the creation of infrastructure. Whether through public-private partnerships (PPPs), regulated utilities or hybrid ownership structures, these procurement methods have allowed countries such as the United Kingdom, Canada, and Australia to deliver significant investment programmes using both private sector expertise and capital. The effect has been to promote growth, and accelerate the benefits from these capital intensive assets in a manner unachievable by the public sector alone. Lessons learned by nations such as these will be important in addressing the infrastructure gap between the developed and developing world, but also in meeting the very sizeable investment needs of some developed markets as well.
In October last year, the International Monetary Fund (IMF) reported global growth was below par, at 3.1 per cent for 2016. Forecast growth for the G20 countries is an anaemic 2.1 per cent. To my knowledge, this is the longest running period in which performance has so consistently undershot growth forecasts. Over the past nine quarters there has been only one occasion of an upwards revision (and then only by five basis points). Central banks clearly understand the problem and have addressed it by using monetary levers. However, the effectiveness of these tools is now diminished when interest rates are already so low.
Governments should be looking to infrastructure as the next policy lever to drive growth. Returns to growth from infrastructure are well established. According to the IMF, a 1 per cent increase leads to, on average, a 1.5 per cent GDP boost over four years...