Infrastructure Investment Essential for Post-COVID Growth: IMF
The International Monetary Fund said member governments should seize a low-interest rate opportunity to invest in infrastructure to drive recovery from the coronavirus pandemic and a shift toward greener energy. Increasing public investment by 1 percent of GDP in advanced and developing economies would grow their GDP by 2.7 percent, creating 7 million jobs directly, and between 20 million and 33 million jobs overall when considering the indirect macroeconomic effects. Some countries with tighter financing conditions will have to take a more gradual approach to scaling up infrastructure development, but the improved growth prospects could pay off if projects are well-managed and set the stage for future growth. ”Even before the pandemic, global investment had been weak for over a decade, despite crumbling roads and bridges in some advanced economies and massive infrastructure needs for transportation, clean water, sanitation, and more in most emerging and developing economies,” IMF Fiscal Affairs Director Vitor Gaspar said. The Fund said public investment in infrastructure is feasible and can be delivered quickly if governments invest in maintenance of infrastructure, review and restart projects that were shelved at the start of the pandemic, speed up projects in the pipeline and plan immediately for a post-pandemic investments. The IMF research shows public investment in infrastructure, including investments in health care systems, digital infrastructure and addressing climate change can pay back more than two to one in economic growth within two years.
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