TO WATCH: Digital dilemma. Delayed by covid-19, the EU’s new Medical Device
Directive comes into full force in May as regulators scurry to catch up with smart-health
apps and wearables. Fitbit and Apple are monitoring closely.

Infrastructure

Governments face a dilemma. Infrastructure is capital-intensive and their debts have
exploded: rich nations’ debt-to-GDP ratio will exceed 120% by the start of 2021 and
poorer countries are building their own gargantuan piles. Yet infrastructure can offer a
rewarding target for stimulus spending: the gap between the investment needed
globally and expected outlays runs into trillions of dollars. Overall, the urge to spend
will win out in 2021. Gross fixed investment, a rough proxy for infrastructure spending,
will strengthen by 8% globally. It dropped by 10% in 2020 as coronavirus distracted
governments and construction workers stayed at home.

Many of the keenest builders will be in the developed world. Nine of the 25 fastest-
growing spenders will hail from Europe, with France and Ireland growing by 20% or
more. Britain, too, will make it into the top 25 as its Conservative government tries to
use infrastructure improvements to boost the Midlands and the north of England. For
scale of investment, though, no one will match China: its fixed-asset investment will
rebound by nearly 7% in dollar terms to $6trn, 30% of the global total. China wants to
channel cash towards improving its digital infrastructure, but more traditional targets
(rail, road and urban infrastructure) will benefit, too. India’s spending, though much
lower, will surge by 18% as Narendra Modi’s government makes infrastructure a pillar
of recovery.

Elsewhere the setback for spending will be longer-lasting. Under Joko Widodo,
Indonesia had hoped to throw money at creating new connections between its myriad
islands. But the president’s goals are under threat from both the virus and Indonesia’s
paltry fiscal income (less than 14% of GDP). Big improvements to Indonesia’s
infrastructure will be elusive in 2021.