Infrastructure spending expected to rise in Eastern Europe

Investment in Eastern Europe’s infrastructure could “rise significantly over the next two years”, according to market research from UK-based analyst GlobalData.

Its latest report, ‘Prospects for Public Infrastructure Projects, Eastern Europe’, assesses the ability of governments and countries to speed up public infrastructure works, as a way of stimulating the growth in their economies after the contraction caused by the pandemic.

It determined that, while regional governments may seek to accelerate their infrastructure projects, “only four out of the 15 markets assessed have good prospects” to do this.

The report from the research and analysis company also indicates that the construction industry in Azerbaijan will grow by 9.1% over the course of 2021.

Moustafa Ali, economist at GlobalData, said, “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.”

This research comes just months after a previous report from GobalData research indicated that Azerbaijan’s construction industry, which shrank by 15.2% last year, would grow by 9.1% over the course of 2021, as a result of infrastructure and oil and gas investment.

According to this latest report, Poland is among the countries thought to be capable of speeding up infrastructure development. In addition to “receiving a sufficient share of the EU recovery funds”, the country’s government also has “ambitious spending plans”.

Alongside Russia and Croatia, the Czech Republic, Estonia, Hungary, Kazakhstan, Latvia, Lithuania and Romania are also among the countries detailed in the report.

Ali added, “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.”