My Speech at the G7 Partnership for Global Infrastructure and Investment in Italy

Below are my remarks at the Partnership for Global Infrastructure and Investment, co-hosted by President Biden and Prime Minister Meloni, during the G7 Summit in Apulia, Italy on Thursday, June 13, 2024.

Prime Minister Meloni, President Biden, your excellencies: Thank you.

I’m honored to participate in this conversation about the Partnership for Global Infrastructure.

Last November, BlackRock had the chance to offer some thoughts about how the G7 and the multilateral development banks could unlock more private capital for infrastructure in emerging nations.

The IMF and the World Bank were created 80 years ago when banks, not markets, financed most things. Today, the financial world is flipped. The capital markets are the biggest source of private-sector financing, and unlocking that money requires a different approach than the bank balance sheet model.

There is still a lot of work to be done. But reforms over the past 8 months have resulted in billions of new dollars for developing-country infrastructure. That’s what you saw last week with the announcement of the Investor Coalition.

BlackRock, GIP, KKR, and many other firms will deploy $25 billion dollars in Asia’s emerging economies. In a way, it is an Indo-Pacific counterpart to Italy’s Mattei Plan, which is helping African economies grow. That’s important work. Every country needs a growth strategy.

But if I could only convey one message today, it would be this: The countries that need growth most right now are not just emerging economies.

Great economic powers, including the G7, are on that list, as well.

All of us are staring down a growth dilemma. Whether we solve it – or not – is a significant economic fork-in-the-road for our countries.

Today, the G7’s average debt-to-GDP ratio is 129%. No matter how much we tax or cut to reduce that debt, it will not be enough. The only way out is by growing out.

But just as growth is becoming more important to our fiscal health, it is also becoming much more difficult to achieve. Within 25 years, most of the G7 will be on a demographic downslope. Working-age populations will decline. The ceiling on growth will get lower and lower.

This is why building new infrastructure is crucial, especially through public-private partnership.

Infrastructure investment is a counterforce to a high-debt, low-growth economy. It does the opposite. It catalyzes growth without necessarily adding public debt. This is true for every kind of infrastructure from airports to data centers for artificial intelligence.

With AI, the infrastructure is actually a double catalyst. The electricity demand from data centers is causing the U.S. energy sector to grow after 15 years of stagnation. AI will also make people more efficient, meaning our smaller future workforce can still become more productive than our larger current one.

Building this infrastructure for growth will require something from us.

It will require pragmatism.

We need pragmatism in financing.

Some of the new data centers require one gigawatt of power. At BlackRock, we estimate the infrastructure to build the data center and that gigawatt of power costs about $10 to $12 billion dollars – and that’s not even counting the technology inside.

Between now and 2040, the world will need to spend $75 trillion repairing old and building new infrastructure. Asking taxpayers to shoulder $75 trillion of new debt is not something countries can fiscally – or fairly – do. Instead, we should look at the growing pool of private investment.

We also need pragmatism in policy – specifically, permitting.

When President Biden signed the Inflation Reduction Act two years ago, the law’s clean energy investments were projected to reduce 710 million metric tons of carbon emissions by 2030. But if permitting delays continue, the new projection is 475. It’s a U.S. statistic that holds a global lesson. In both the U.S. and the E.U., permitting for the average infrastructure project takes longer than building it. That should change.

Finally, we need pragmatism in energy.

Much of the new infrastructure being built is for renewables. BlackRock recently invested in Africa’s largest wind farm near Lake Turkana in Kenya. It’s now supplying about 12% of the country’s electricity. But without advances in storage, wind and solar can’t provide a constant, reliable flow of electricity. The world can’t function without that.

Data centers are the bedrock of the digital economy. I’ve seen estimates that more than half their electricity may have to come from dispatchable sources like nuclear or natural gas. Otherwise, the data centers will shut down.

The world has many seemingly insurmountable challenges, questions with no apparent answers. This is not one of them.

The growth dilemma we face is hard, but it is not impossible.

There is an apparent answer, a simple chain of logic: We can grow by building infrastructure.

We can build infrastructure by unlocking private investment. We can unlock private investment by being pragmatic about permitting and energy policy.

These are admirable goals, and BlackRock is a full partner in achieving them.