However, far from being a burden, these needs represent a unique opportunity: infrastructure is not just a cost – estimated at around $43 trillion through to 2050 – but also a catalyst.1
According to a 2022 World Bank study, every dollar spent on public infrastructure generates $1.50 in additional economic output.2 This multiplier effect underscores the pivotal role of infrastructure in shaping the long-term growth landscape. 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 2050.3
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 centers of demand in the south.
Unlike the wavering political support for renewable investment in the US, many EMs continue to prioritize the energy transition.
Despite these hurdles, EMs are forging ahead. Unlike the wavering political support for renewable investment in the US, many EMs continue to prioritize 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 renewable footprint
China’s infrastructure ambitions are reshaping the global landscape. With a projected $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.
This scale has ripple effects. China's investment in renewable energy infrastructure is likely to 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 and Latin America, particularly in port capacity and road networks.
Deglobalization 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 example, has become a key example of a country with untapped potential for port expansion. Investing in transportation infrastructure will be crucial to support trade, lower logistics costs, and open new growth opportunities.
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.4
Debt investors play a critical role, 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 vs. comparable risk-free government bonds – of some 300 bps, or three percentage points.
EMs also offer private market opportunities. Loans, private placements, and bilateral lending arrangements come with illiquidity premiums of some 150–300 bps 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
We believe EMs 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, favorable 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. For those willing to invest in the journey, the rewards can be transformative.
Endnotes
1 Aberdeen, spending in real-dollar terms, May 2025.
2 "The effectiveness of infrastructure investment as a fiscal stimulus: What we’ve learned." World Bank Blogs, February 2022. https://blogs.worldbank.org/en/ppps/effectiveness-infrastructure-investment-fiscal-stimulus-what-weve-learned.
3 International Energy Agency, Aberdeen, May 2025.
4 "The 17 Goals." Department of Economic and Social Affairs, Sustainable Development. United Nations, July 2025. https://sdgs.un.org/goals.
Important information
Projections are offered as opinion and are not reflective of potential performance. Projections are not guaranteed and actual events or results may differ materially.
Foreign securities are more volatile, harder to price and less liquid than U.S. securities. They are subject to different accounting and regulatory standards, and political and economic risks. These risks are enhanced in emerging markets countries.
Fixed income securities are subject to certain risks including, but not limited to: interest rate (changes in interest rates may cause a decline in the market value of an investment), credit (changes in the financial condition of the issuer, borrower, counterparty, or underlying collateral), prepayment (debt issuers may repay or refinance their loans or obligations earlier than anticipated), call (some bonds allow the issuer to call a bond for redemption before it matures), and extension (principal repayments may not occur as quickly as anticipated, causing the expected maturity of a security to increase).
Products investing in infrastructure are subject to the risk of concentrating investments in infrastructure-related companies, which makes them more susceptible to factors adversely affecting issuers within that industry than would a product investing in a more diversified portfolio of securities. These risks include high interest costs in connection with capital construction programs and the costs associated with environmental and other regulations.
AA-230725-196527-1