Are we on the cusp of a global capex boom?

Expected to surge by almost 12% in 2021

clock • 4 min read
Ritu Vohora of T. Rowe Price
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Ritu Vohora of T. Rowe Price

It has been an eventful time for petrol stations across the UK. Panic buying of fuel has seen demand overwhelm supply. More broadly, the huge pent-up savings from the pandemic has seen a significant demand surge for goods.

While global manufacturing continues to supply goods at a record pace, supply chains have not been able to keep up - from used cars, semiconductors and furniture, to Nandos' chicken. Businesses without sustainable supply chains will see share prices fall This has been further exacerbated by global capital expenditure (capex) levels having slumped in recent years. Capex levels have not kept pace with depreciation since 2017, and the pandemic unsurprisingly caused a further depression in capital spending. The MSCI AC World Capex to depreciation ratio (ex-financials) dropped to around on...

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