Kickstarting the post-Covid economy

20 May 2020

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The 12th FIDIC Covid-19 webinar took place on Wednesday 20 May 2020 with an event looking at kickstarting the economy after the Covid-19 crisis and learning lessons from what governments are doing around the world, writes FIDIC communications advisor Andy Walker.

“Covid-19: Kickstarting the economy – lessons learned from what governments are doing around the world” was attended by 407 attendees and reviewed the responses to the crisis from governments and international NGOs across the globe and the impact on the infrastructure industry going forward.

Moderated by FIDIC CEO Nelson Ogunshakin, the speakers at the event included FIDIC board member Anthony Barry, Richard Threlfall, global head of infrastructure at KPMG, Mark Worrall, chief executive of  Estates and Infrastructure Exchange, Graham Pontin, FIDIC’s head of economic and strategic policy and FIDIC president Bill Howard.

Kicking off the event, FIDIC president Bill Howard praised FIDIC for holding such a vital series of events to assist the industry. He talked about the unprecedented global governmental response to the pandemic, which had been reflected in the US by unparalleled federal support for workers salaries to safeguard jobs. Howard also made the point that despite Covid-19, the world’s infrastructure needs were still acute and needed to be solved and therefore the role of the industry, especially engineers, would be absolutely vital in shaping a successful recovery from the current crisis.

FIDIC board member and vice-president of FIDIC, Anthony Barry, speaking from Australia said that both his country and also New Zealand had been less affected by Covid-19 than other countries, though the government had embarked on a significant support programme for industry and businesses. He reported that the construction industry was designated as an essential industry by the Australian government during the pandemic and this was a big plus for the sector. He also highlighted that FIDIC member association Consult Australia had played a key role during the crisis in representing the industry. Notwithstanding all the measures being taken by the government, Barry said that unemployment was widely expected to rise as a result of the pandemic. He also made the key point that the current crisis was not financial, but a health one, and it was important to recognise this as the industry got back to work in coming months.

Graham Pontin, FIDIC’s head of economic and strategic policy, said that the economic cost of Covid-19 was going to be greater than that of the last financial crisis, with growth rate predicted to be lower and uncertainty significantly higher. According to the UN's trade and development agency, the slowdown caused by Covid-19 is likely to cost at least $1 trillion, he said and the IMF was projecting that the global economy is likely to contract sharply by 3% percent in 2020. Pontin also warned that a “doomsday scenario” in which the world economy grew at only 0.5%, would involve “a $2 trillion hit” to GDP. He also said that infrastructure spending and portfolios will adjust to the current crisis. “The early signs are that this shift will occur towards green, heath, technology and housing types of infrastructure,” Pontin said.

Richard Threlfall, global head of infrastructure at KPMG, said that there has been a general recognition by governments throughout the crisis that the infrastructure industry was a crucial sector and this had led to a number of governments being keen to keep major projects on track. As nations emerge from Covid, he said that there was likely to be a renewed focus on industries that could boost economic recovery and that this focus was very likely to be sharpest on environmental projects, as there was a growing feeling that we needed to look after the planet much better than we have been. A “green revolution” was on the cards, he said, together with a move towards having a much more financially sustainable industry with an increased concentration on technology and data. This would have big implications for the industry and organisations like FIDIC would need to prepare for that going forward.

Estates and Infrastructure Exchange chief executive Mark Worrall said that infrastructure should be seen as a good home for sovereign wealth groups if they were prepared to pay for decent infrastructure, but that the industry also needed to show through data that it was more reliable and able to deliver on time and on budget. Programmes of projects needed to brought together, like those sponsored by the World Bank, to get away from individual projects. The industry needed to think more globally and regionally rather than having a nation-centric approach. Worrall also saw a move towards more regional and sub-regional autonomy as global economies emerged from the Covid-19 crisis. This trend would have implications for the industry and the way it operates, he said.

In the discussion, Anthony Barry made the point that the infrastructure sector’s problem was not finance it was the lack of bankable projects and the political will to deliver them this needed to be addressed in the future. “We need to create energy around the future debate about what kind of infrastructure we need but we don’t just want debate, we need to get on with delivering it too,” he said. Graham Pontin said it was important that dialogue took place with governments about the kind of infrastructure needed in the post-Covid world, which was clearly a key role for FIDIC and similar organisations.

Richard Threlfall highlighted the need for international collaboration, especially in the area of the environment. “There is a significant risk that the crisis will drive countries back to its own borders with a focus on themselves, but this would be a mistake,” he said. A multilateral global response was absolutely essential so that solutions could be directed to where they were most needed, said Threlfall.

The questions from the floor covered a wide range of issues including getting the economy back on track in developing countries, the role of private investment when governments are pumping in huge sums to their economies, the need for a greater level of industry cooperation among countries given that infrastructure is likely to become very expensive when everyone is trying to rebuild at the same time, the growing trend towards greener infrastructure, the effects of home working on the industry and how the sector influences world governments and financial institutions.

Closing the webinar, FIDIC CEO Nelson Ogunshakin said that it was important to see the opportunities as well as the challenges arising out of the current crisis. The infrastructure industry would have a key role to play in kickstarting the economy, he said, as countries emerged from the pandemic and took the economic steps towards rebuilding their economies.

The next FIDIC webinar in the series is “The role of international finance institutions and the exit from Covid-19” which takes place on Tuesday 26 May at 12 noon CET. Please register your place as soon as possible as we expect another big turnout for this event.

Click here to book your place on the role of international finance institutions webinar.

View recording of the Kick-starting the economy webinar on the YouTube link below. 

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