This Year's Global Corporate Capital Expenditure Growth Rate at 10%, 'Highest in 10 Years'

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[Asia Economy Reporter Park Byung-hee] Major foreign media reported on the 23rd (local time) that the global corporate capital expenditure (CAPEX) growth rate is expected to reach 10% this year, the highest in 10 years.

Financial information firm Refinitiv analyzed about 4,100 non-financial global companies with a market capitalization exceeding 1 billion USD (approximately 1.1365 trillion KRW) and stated that total capital expenditure this year is expected to increase by 10% compared to the previous year.

Last year, capital expenditure decreased by more than 4% due to the spread of COVID-19, but a sharp rebound is expected this year with economic recovery. Low interest rates, government expansion of infrastructure investment, and the transition to a green energy economy are also expected to be factors driving corporate capital expenditure growth this year. However, Refinitiv forecasted that the capital expenditure growth rate will slow to 2% next year.

Mislav Mateka, investment strategist at JP Morgan, explained, "Corporate profitability has greatly improved, leading to increased capital expenditure this year," adding, "The easing of bank lending standards is also helping companies expand their capital investments."

As of the first quarter of this year, corporate free cash flow was confirmed to be 332 billion USD, the highest in 10 years.

By region, Europe's capital expenditure growth rate is expected to reach 13% this year, higher than the United States (11%) and Asia-Pacific (9.7%). Emerging markets' capital expenditure growth rate is expected to be 8%, falling short of the US and Europe. This is because COVID-19 infections are still spreading in emerging markets, causing companies to hesitate in investing. The debt ratio of emerging market companies is also rising, which is expected to hinder investment.

By industry, IT companies are expected to record the highest capital expenditure growth rate at 17.4%. Intel announced a $20 billion investment plan earlier this year, and Sony also announced plans to invest $18 billion over the next three years.

Capital expenditure growth rates for consumer goods and utility companies are also expected to be high at 17.3% and 13.8%, respectively. On the other hand, capital expenditure in the real estate and energy industries is expected to decline.

This content was produced with the assistance of AI translation services.