Infrastructure investment in Eastern Europe could rise significantly over the next two years if projects are pushed ahead by regional governments; however, only four out of the 15 markets assessed have good prospects to accelerate infrastructure investment, according to a study by GlobalData, a leading data and analytics company.
According to GlobalData’s report, ‘Prospects for Public Infrastructure Projects, Eastern Europe’, the two best placed countries in the region are Russia and Poland. In assessing these prospects, GlobalData has taken into account the size of the pipeline of projects in each country, the composition of this pipeline in terms of stages of development, the political momentum behind infrastructure investment, the state of the government’s finance and the economic recovery outlook.
In Russia, infrastructure investment will be supported by the recovery in commodity prices, which will provide significant fiscal support for the government. While in Poland, the government’s ambitious spending plans coupled with the country receiving a sufficient share of the EU recovery funds will see the likely acceleration of investment in infrastructure projects.
Moustafa Ali, Economist at GlobalData, comments: “EU support in the form of the EU recovery funds will provide a significant boost for infrastructure construction across the EU. Given the weak outturn in economic growth in Eastern Europe amid the COVID-19 crisis, governments and public authorities will likely be aiming to advance spending on infrastructure projects to reinvigorate the construction industry and the wider economy.
“Investment in infrastructure is generally considered to have a high multiplier effect, with the overall increase in economic value being higher than the value of direct investment itself. Prior to the virus outbreak in 2020, growth in investment in infrastructure construction across Eastern Europe had been volatile, in part owing to fluctuations in funding for key markets. However, with the EU Recovery Funds approved by the European Commission, there is the potential for the Eastern Bloc to push forward infrastructure spending.”