December 20, 2019

Development of middle class in South East Asia will encourage infrastructure investment

The development of the middle class across South East Asia has been a recurring theme over the last few years, and there is no sign that the trend will slow down in 2020.

Asia’s population is expected to grow to almost 5.3 billion by 2050. Millions of households will enter the middle class, becoming major consumers armed with growing disposable incomes, with basic infrastructure – roads, bridges, hospitals and power plants – needing to keep pace. By 2030, it is forecast that two-thirds of the global middle class will be living in Asia, and the region will account for nearly 60 per cent of the world's middle class consumption by that date.

It follows that the infrastructure outlook for Asia Pacific remains positive, with the surging middle income population creating opportunities for investment in 2020. Take the remarkable recent success stories of Indonesia, whose planning minister this year announced the government was drafting plans for more than $400 billion in building projects, from constructing 25 airports to new power plants, with a significant portion of investment drawn from the private sector. Similarly, Vietnam is in the midst of heavy government spending in infrastructure.  As in the past, local politics issues may affect the timing of these projects but they are needed and will be built.

Even if we factor in the hit to confidence from the ongoing uncertainty around global trade, the underlying demographics of the region favour greater investment in infrastructure over the next twelve months.

Read the rest of our projects & construction predictions here.