Global | How is investment doing? A cross-country analysis

Summary

Despite uncertainty and high interest rates, investment remains strong in countries like the U.S. and France, especially in intellectual property and ICT, but not in Spain, Canada, and most emerging markets. GDP growth remains key, but digitalization and climate transition policies will drive future investment.

Key points

• Key points:
• There is not a widespread weakness in investment despite tight monetary conditions and geopolitical, political and economic uncertainty. There are strength signs in countries such as the US, France and some Northern European and Baltic countries and in segments such as intellectual property and ICT and some other services.
• Still, there is evidence of weak investment in Spain, Canada, Australia and most Emerging Market countries and for investment in equipment assets and in transportation and mining sectors.
• In line with the literature, our findings show that GDP growth is the key driver of investment and that other variables (such as expectations, investment price, the rule of law, credit conditions, etc.) seem to be less important, although they can still be significant, at least in some cases.
• AI, digitalization, climate transition and protectionism will potentially drive investment up ahead, despite some expected negative effects (mainly related to protectionism); in fact, recent investment dynamics suggest these factors are already supporting fixed capital spending, at least in some countries.
• For additional analysis, see the BBVA Research article “New times for investment?” recently published in press here.

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