But far from being a burden, these needs represent a unique opportunity: infrastructure is not just a cost – estimated at some US$43 trillion through to 2050 – it’s also a catalyst [1].

According to a 2022 World Bank study, every dollar spent on public infrastructure generates US$1.50 in additional economic output.

This multiplier effect underscores infrastructure’s role as a ‘keystone’ in the architecture of long-term growth. Power grids, roads, railways and ports don’t just help move goods – they move economies.

Powering progress: the energy imperative

One of the most pressing infrastructure challenges for EMs lies in energy. As economies expand and manufacturing sectors scale up, electricity demand is surging.

The International Energy Agency forecasts that power consumption in India, Africa, the Middle East and Southeast Asia will more than double by 2050 [2].

But meeting this demand isn’t just about adding more power plants. The global pivot towards renewable energy means EMs must install significantly more capacity than what traditional energy sources require. Solar and wind, while cleaner, are less consistent – requiring larger installations and robust storage solutions.

This shift also demands extensive supporting infrastructure, such as transmission lines and grid upgrades. Chile, for example, has faced challenges in connecting its abundant solar generation in the hot and dry north to centres of demand in the south.

Despite these hurdles, EMs are forging ahead. Unlike the wavering political support for green investment in the United States – particularly under President Donald Trump’s second term – many EMs continue to prioritise the energy transition.

Political will in EMs remains strong, driven by the promise of economic development, energy security, climate resilience and the lower operating costs of renewables.

China's giant green footprint

China’s infrastructure ambitions are reshaping the global landscape. With a projected US$12 trillion investment in power generation alone, China is set to undertake the largest single infrastructure initiative by any country – accounting for nearly one-fifth of global infrastructure spending over the next quarter century [3].

This scale has ripple effects. China's investment in renewable energy infrastructure will also likely lead to advancements in technology and reductions in costs, making it more accessible for other emerging markets to adopt similar strategies. In effect, China’s infrastructure push is not just a domestic strategy; it’s a global enabler.

Beyond energy: transport and trade

Energy isn’t the only sector with significant gaps. Transport infrastructure – roads, railways and ports – remains underdeveloped in many EMs. While China has made substantial progress, other EM regions lag.

For example, our latest research highlights acute needs across the Association of Southeast Asian Nations (ASEAN) and Latin America, particularly in port capacity and road networks [4].

Deglobalisation pressures, such as trade tensions and protectionist policies, have raised concerns about the future of global supply chains. Yet many EMs continue to integrate into these networks.

Peru, for instance, has emerged as a key example of a country with untapped potential for port expansion. Investing in transport infrastructure will be essential to support trade, reduce logistics costs and unlock new avenues of growth.

Why investors should pay attention

The scale of EM infrastructure needs is staggering but so is the opportunity. Building infrastructure is essential not only for economic growth, but also for achieving the United Nations’ 17 Sustainable Development Goals.

Debt investors have a critical role to play – both in traditional capital markets and through private credit solutions. Infrastructure-debt issuers in emerging markets often benefit from long-term cash flow visibility and supportive regulations, making them attractive from a risk-adjusted perspective.

Despite possessing investment-grade characteristics, these issuers typically pay a healthy yield premium – the additional compensation investors receive versus comparable ‘risk free’ government bonds – of some 300 basis points, or 3 percentage points.

EMs also offer private market opportunities. Loans, private placements and bilateral lending arrangements come with ‘illiquidity’ premiums of some 150 to 300 basis points above comparable publicly traded bonds. Private markets also allow investors to negotiate stronger protections, such as collateral and covenants, while enhancing portfolio yield and reducing volatility.

Final thoughts

Emerging markets stand at the crossroads of challenge and opportunity. Infrastructure investment – particularly in energy and transport – isn’t just nice to have; it’s a strategic imperative.

With strong political momentum, favourable economics and growing investor interest, EMs are poised to lead the next wave of global development.

The road ahead is long, but the foundation is being laid. And for those willing to invest in the journey, the rewards could be transformative.