GLOBAL companies from noodle makers to semiconductor giants are spending on new plants and machinery in ways they haven’t done for years. On the supply side, blockages brought on by the COVID-19 pandemic are forcing businesses to invest in new production facilities; calls for a cleaner environment are spurring spending on electric vehicles, batteries and alternative energy; and the big semiconductor crunch has prompted a wave of investment. On the demand side, pent up consumer spending is convincing executives that capital is worth outlaying — a sign that business is buying into the world’s economic recovery prospects even as the delta strain casts a shadow. Fueling it all are low interest rates and bets they’ll stay that way. Globally, corporate capital expenditure, or capex, will jump by 13 percent this year, according to S&P Global Ratings, with growth in all regions and broad sectors — especially in semiconductors, retail, software and transportation. Economists at Morgan Stanley forecast that global investment will reach 115 percent and 121 percent of pre-recession levels by the end of 2021 and end of 2022, a much faster recovery than previous downturns. “A recovery in business investment is critical for longer-term growth, as capital accumulation is key for lifting productivity growth,” said Rob Subbaraman, head of global markets research at Nomura Holdings Inc. “Once the unprecedented global policy stimulus fades, the world needs business investment and structural reforms to sustain growth.” “Capex in sectors that benefited from lockdown and remote work have been supercharged by the pandemic, expediting pre-COVID trends,” said Anna Wong, chief U.S. economist at Bloomberg Economics. With inflation jitters rising, central bank tapering looming and supply chain chaos continuing, the capex surge offers a rare ray of hope for the global economy into 2022 and beyond. It’s also a very different dynamic from the last global crisis of 2008, when austerity and weak investment dragged on employment and wages for years to come. Examples of new spending are evident from emerging markets to the world’s biggest companies. Longer-term investment will be driven by trends such as supply chain diversification or accelerated automation in the services sector as workforces age. (SD-Agencies) | 