It boosts GDP through government spending. When governments invest in infrastructure, it creates jobs, increases demand for materials, and improves productivity. Roads, for example, help businesses move goods faster, while schools improve education, leading to a more skilled workforce. These investments have multiplier effects—they not only raise GDP today but also support long-term growth.

That’s why governments often increase public spending during economic slowdowns to stimulate activity. However, it’s important that this spending is efficient and targeted, otherwise it may increase debt without real impact.