Outlook special – March 2020

Pinpoint economic forecasts are unrealistic; of most relevance to infrastructure investors is the likely sharp contraction in GDP growth (at least in the short term), lower oil prices and stress in the credit markets. Infrastructure companies could also face operational issues if employees are unable to work or supply chains are interrupted. Unsurprisingly, the sectors most exposed to an economic shock are GDP-correlated assets such as airports, ports and toll roads, particularly demand-based transportation assets impacted by the world ramp-up of travel bans on non-essential travel. On the other hand, sectors and companies protected by long-term contracts or regulations remain relatively resilient to the near-term volatility, given their elements of cash flow stability underpinning company revenues.