Chart of the week
Several countries have published advance fourth-quarter GDP estimates and the numbers mainly exceed expectations for China, France, Germany, the United Kingdom and the United States.
For many countries, it is too early to provide a breakdown of the various demand components (consumption, investment, etc.), but we have the numbers for France and the United States. Their data show solid corporate investment expenditure, despite uncertainties and the impact of the crisis on balance sheets.
In the United States, non-residential investment rose 3.3% during the quarter (non-annualised) and was down just 1.3% year-on-year. In France, investment by non-financial companies rose 1.5% during the quarter and was only down 3.5% year-on-year.*
The US data provide an even more detailed breakdown by investment category, which shows that outlays on structures (office buildings, plant and factories, etc.) rebounded but remain soft. Meanwhile, investment in capital goods and intangible assets (intellectual property, software, patents, etc.) was particularly dynamic and reached a new high.*
Our analysis
While it remains to be seen if other countries will follow this trend, it is a good sign for the future. Firstly, it shows that business leaders remain confident in the economy. Secondly, that the impact on corporate balance sheets is not pushing firms to curtail their investment expenditure. Thirdly, today’s investment fuels tomorrow’s productivity.
More generally, the better-than-expected growth figures for Western countries despite varying degrees of lockdown demonstrate that the economy is adapting to the new backdrop.
Source : Bloomberg
The opinion expressed above is dated 29th January 2021 and is liable to change.
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