- The Organization for Economic Cooperation and Development said that major infrastructure programs like the $1 trillion plan proposed by President-elect Donald Trump could boost the global economy, according to ABC News.
- Due in part to stimulus plans in both the United States and China, the OECD raised its world economic growth projection to 3.3%, a modest uptick from its previous forecast of 3.2%. The group also raised its U.S. growth projections for 2017 (2.3%) and 2018 (3%) on expectations of an "easing of fiscal policy."
- The group warned, however, that if the protectionist trade principles espoused by Trump and other politicians are incorporated into infrastructure spending legislation, they could result in higher costs and economic woes for other countries.
The OECD said the almost-flat growth seen in recent years could be over as governments take advantage of low interest rates to fund infrastructure and education programs. Trump's infrastructure proposals and tax-cutting promises, the report said, have seen market support, and if he can further his plans to the point of implementation, increased economic activity could result.
A June McKinsey Global Institute report determined that major countries need to increase their infrastructure spending — transportation, power, water and telecommunications — by an average of $350 billion a year from now until 2030 to meet demands imposed by use. However, McKinsey noted that many of these nations have cut back on infrastructure spending, despite being told they could create a "jolt" for their economies by upping such expenditures. The American Society of Civil Engineers' latest report card gave U.S. infrastructure a D+ and said the country needs to invest at least $3.6 trillion by 2020, or U.S. businesses, gross national product and family disposable income would suffer.
McKinsey said the U.S. spent 3.2% of GDP on infrastructure in 2014, which was a reduction from 2009's level of 4.2%. If Trump's plan becomes a reality — which is still up in the air — the U.S. should see significant private investment in user- and fee-based infrastructure assets and the proliferation of public-private partnerships as a way to deliver them. His original proposal also provides for an 82% tax credit on private equity investment. However, until Trump's team hammers out a more detailed plan, it remains to be seen how attractive the terms will be for the private sector.