S&p: Infrastructure Investments To Support Global Economy

- Small increase in spending on infrastructure could yield outsized returns, especially if investments were executed in a wise, targeted way, according to a research, released by the International rating company Standard & Poor's on Wednesday.

"With global infrastructure investment needs now in the tens of trillions of dollars--figures that are essentially incomprehensible to most of us--it's easy to see the problem as insurmountable. The result is that too often, we forget that even a relatively small increase in spending on infrastructure can yield outsized returns--especially if investments are executed in a wise, targeted way" said the Economic Research done by Standard & Poor's on "Global Infrastructure Investment: Timing Is Everything And Now Is The Time.

"These returns aren't just for lenders, who often enjoy lower default rates and higher yields for infrastructure projects than they might reap from similarly rated corporate debt--especially in developed markets. Economies will also generally benefit from the so-called 'multiplier effect' when they promote such investments, with each dollar of spending translating into much greater gains in terms of GDP" said in the Economic Research by Standard & Poor's.

Standard & Poor's said sees clear economic benefits to G20 countries' increased public spending on infrastructure with the so-called "multiplier effect" of an increase in spending of 1 percent of real GDP running as high as 2.5 in a three-year period.

The "multiplier effect" was generally greater in developing economies than for more developed countries, like China, India, and Brazil would all enjoy a boost to GDP of at least double the increase in investment, according to the Research.

"For Europe, it's clear that a concerted effort across the region would have a greater effect than country-specific increases in spending. For developed nations, the increase would boost employment substantially--adding more than 700,000 jobs in the U.S. and about a million in the EU" said in the Research.

IMF'S LAGARDE: INFRASTRUCTURE INVESTMENT CAN SUPPORT GROTH"
IMF Managing Director Christine Lagarde had also underlined the importance infrastructure investments, in her speech during a presser at the IMF-World Bank Annual Meetings in October.

"Increased investment in infrastructure can effectively support growth in the short term, by putting people to work through major construction projects or maintenance jobs. Infrastructure investment can also impact the supply side in the medium term by facilitating and accelerating the creation of value" she said.

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