Infrastructure investment risk heightens across the globe

20 Dec 2016

Based on the Q4 2016 update of Timetric’s Infrastructure Risk Index (IRI), risks in infrastructure investment have increased globally, with the unweighted global average score rising to 45.2 from 44.0 in Q3 2016.

 

Risk has picked up across all regions covered in the IRI, with the worst performing regions being the Western and Eastern parts of Europe. While scores rose in both emerging markets and advanced economies, effects were felt more in the latter, increasing 1.7 points to 36.7 behind declining investment in fixed capital and subdued growth in GDP.

 

Canada and the US remained the top two ranked countries in the IRI, both continuing to represent an environment of low risk and high infrastructure investment opportunity. Following the surprising election result in the US, a downward movement might have been expected. However, with Donald Trump’s more restrained approach since the election and the stock market and other economic indicators recording upticks, a downgrade at this time would be premature.

 

In total, 16 countries saw positive movement in their IRI scores in Q4, with the Philippines leading the way in this regard. The Philippines continued trends of positive growth in GDP and construction output, as well as achieving more sustainable levels of domestic lending. Concerns do remain in the country, with President Duterte’s controversial tactics against the war on drugs, among other political stances, causing net foreign flows to take a hit as foreign investors grow wary of the situation. At the other end of the spectrum, Poland saw the largest negative increase to its score following a standstill in EU funding to the country. The construction sector has been hit particularly hard, declining by 18.6% year on year in the first three quarter of 2016.

 

The IRI is designed to provide a standardized view of the underlying degree of country-level risk and investment opportunities in infrastructure for 60 major developed and emerging markets around the world.

 

The IRI, which is updated on a quarterly basis, provides an analysis of current conditions and a forward-looking assessment of investment opportunities, in terms of rising demand for new infrastructure and a political and economic environment that would support such growth, and risks that could undermine growth prospects, either by preventing new projects from being executed, or through disruption or cancellation of existing projects.



Source: Company Press Release