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Companies across the globe are ramping up their spending, with global ratings agency S&P Global Ratings forecasting corporate capital expenditure (capex) will rise 13% this year.
According to the ‘Global Corporate Capex Survey 2021: Surge Investing’ report, global capex from nonfinancial companies fell to $3.3-trillion in 2020 from $3.5-trillion in 2019, and it is set to rebound to $3.7-trillion this year.
Semiconductors, retail, software and transportation contributed the most to the increase in capex, while commodity sector capex is likely to remain disciplined, S&P says.
The report says capex has proved resilient to Covid-19, despite contracting 6% in 2020, as much of this stemmed from sharp commodity capex cuts. Excluding energy and materials, 2020 capex fell just 2%, and it will grow by 15% to $2.8-trillion this year from $2.5-trillion in 2020.
Sixteen of 20 industry groups will spend more this year than before the pandemic, the report finds.
It is this resilience which reflects the Asia-Pacific region's better handling of the pandemic, the impact of government support and growth drivers such as digitisation and the energy transition.
The ongoing economic recovery should also keep the capex momentum going, along with powerful policy encouragement for infrastructure and climate-related spending.
Global shortages of semiconductor chips have also had a significant impact on other industries this year, notably automotive and technology hardware, and semiconductor spending should alleviate the shortages.
The companies in S&P Global Ratings' Global Capex 2000 universe have a record $7.9-trillion of cash on their balance sheets.
The top 60 global nonfinancial capex spenders in this universe, together, invested $1-trillion over the past year, with energy remaining the most heavily represented sector.