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COVID-19 creates disruption in infrastructure investment: Swiss Re

22nd April 2021 - Author: Katie Baker

Global reinsurer Swiss Re has released a report which shows a short-term disruption in infrastructure investment as a result of COVID-19, however the reinsurer noted that the long-term trend has remained the same.

Swiss ReIt also expects the growth in infrastructure investment to resume this year as the vaccination roll-out enables economies to reopen and as governments invest to support the recovery.

In the US Biden has proposed a two-phase plan with a USD 3.2 trillion public infrastructure package over 10 years.

The reinsurer also noted that the global infrastructure transaction value fell by 57% year-on-year in 1Q 2021 as countries dealt with surges in COVID-19 infections.

The report shows that in 2020, deal values declined sharply in Q2 and Q3 as new projects were put on hold and ongoing projects slowed, but a recovery in 4Q led to only a 2% year-on-year fall for the full year.

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Swiss Re maintains its forecast of USD 3.3 trillion public and private investment in global infrastructure annually on average from2021-2040, as per its 2020 sigma.

Insurers are key investors in infrastructure and Swiss Re estimates USD 1.4 trillion of private capital will be needed annually until 2040.

Renewables transaction value grew by 20% year-on-year, while telecommunications deal value doubled. Swiss Re expects renewable energy investment to continue to grow at pace as providers prioritise green infrastructure, supporting the recovery from COVID-19.

However, Swiss Re expects the pandemic to change the design and use of infrastructure. Mobility restrictions are leading to new street designs that prioritise walking and cycling. The rise of remote working has affected usage of transport systems, office buildings and urban areas.

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