01/27/2022 | Press release | Distributed by Public on 01/27/2022 02:24
The Asian Infrastructure Investment Bank (AIIB) expects uneven economic recovery to widen the infrastructure financing gap in developing and emerging Asia in 2022.
Ongoing concern over inflation, pandemic impact and fiscal constraints are dampening investor appetite for development projects and putting pressure on governments seeking to finance new infrastructure. However, the new year will bring opportunities in markets able to overcome pandemic implementation delays and successfully channel capital toward Paris-Aligned investments.
AIIB believes the international community needs to continue encouraging an equitable and green recovery throughout Asia. Top priorities for investors and the development community would be funding for vaccines, climate finance loans alongside capacity to design and implement Paris-Aligned projects and thought leadership on integrating technology into infrastructure investments.
"The turbulence of the past two years is still with us, but there are positive signs the recovery is progressing across much of Asia," said AIIB Chief Economist Erik Berglof. "However, we should not let our guard down. Despite headwinds on the horizon, it is critical to maintain investments that will quicken vaccination efforts and transition emerging markets to net-zero goals."
AIIB predicts the following trends will impact the infrastructure sector in Asia throughout 2022:
The October 2021 IMF World Economic Outlook projects growth in emerging and developing Asia to slacken in 2022 compared to 2021. Pressure to respond quickly to new variants and manage a tightening economic environment leaves policymakers few options to maneuver. Funding decisions need to be carefully thought through to ensure value for taxpayers and a strong return on investment.
Embedding technology, climate resilience and digital capabilities will reduce costs, deliver better-quality data and improve connectivity. "Banks like AIIB can support policymakers in assessing these possibilities and derisking investments," said Berglof.
Multilateral development banks are responding with continued funding for pandemic preparedness and response and support for economic resilience. As part of the coordinated international response to the pandemic, AIIB swiftly pivoted our investment strategy and launched USD13 billion COVID-19 Crisis Recovery Facility (CRF) to support AIIB's members and clients in alleviating and mitigating economic, financial and public health pressures arising from COVID-19. The Bank also committed to have all operations aligned with the Paris Agreement by mid-July 2023. AIIB estimates its cumulative climate finance approvals to exceed USD50 billion by 2030.
About AIIB
The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank whose mission is financing the Infrastructure for Tomorrow-infrastructure with sustainability at its core. We began operations in Beijing in January 2016 and have since grown to 105 approved members worldwide. We are capitalized at USD100 billion and Triple-A-rated by the major international credit rating agencies. Working with partners, AIIB meets clients' needs by unlocking new capital and investing in infrastructure that is green, technology-enabled and promotes regional connectivity.