Читать книгу EIB Investment Report 2020/2021 - Группа авторов - Страница 32

The large decline in investment in the first half of 2020 was commensurate with the contraction in GDP. Investment in the European Union dropped 19% relative to the second quarter of 2019, while GDP fell 14%.[3] This movement follows the usual business cycle pattern where investment declines more than overall GDP in recessions and bounces back more vigorously in expansions. By way of comparison, GDP in the first quarter of 2009 declined by 5.3% relative to the first quarter of 2008, whereas investment fell 11%. What was extraordinary about the decline in 2020 is that it all happened in just two quarters. This speed of events is a clear consequence of the government measures to tame the spread of the pandemic.

Economic activity collapsed around mid-March, as most European governments began implementing drastic measures to curtail the pandemic. Investment might have already started to decline three weeks earlier, at the end of February when financial-market volatility jumped sharply in Europe. The decline in confidence indicators in February, reversing the gains of the previous three months, also supports this hypothesis. As a result, gross fixed capital formation (GFCF) in the European Union slid nearly 4% compared with the first quarter of 2019, with countries in Western and Northern Europe showing the same trend. As previously stated, the contraction was mostly due to falling investment in machinery and equipment (Figure 2a and Figure 3a). In Southern Europe, the downtrend in machinery and equipment investment was reinforced by a similar decline in investment in buildings and structures, including dwellings (Figure 3b). In Central and Eastern Europe, an increase in investment in other buildings and structures offset the decrease in equipment investment (Figure 3c).

Investment declined far less in the United States than in the European Union. This was despite a much smaller difference in the decline in GDP between the two economies. The US deterioration was consistently much smaller across asset types, but followed a very similar pattern to Europe. On both sides of the Atlantic, investment in machinery and equipment declined the most, followed by investment in other buildings and structures and investment in dwellings. Investment in intellectual property increased in the United States in the second quarter of 2020 compared with the same period a year earlier, while in the European Union it declined and helped push down total investment by an additional 0.5 percentage points.

Restrictions imposed across EU Member States acted as a major barrier to investment in the second quarter of 2020. A significant part of the precipitous decline is most likely due to these severe restrictions. The drop in investment in EU countries in the second quarter is clearly associated with the governmental or self-imposed curbs on movement (Figure 4). This kind of restriction explains, in particular, the varying declines in investment in buildings and structures across the different countries, as shown in Figure 3.[4, 5] The restrictions on movement were lifted at the end of the second quarter and the beginning of third quarter. GDP showed a partial rebound in third quarter, so we can expect some of the decline in investment to be reversed in that quarter. That said, the recovery might prove to be unimpressive as two very important factors determining investment decisions gain prominence – uncertainty and the impact of corporate liquidity and net worth.

Elevated uncertainty has a powerful negative effect on investment that is widely documented in the academic literature (Leahy and Whited, 1996; Guiso and Parisi, 1999; Butzen, Fuss, and Vermeulen, 2003; Bloom, Bond, and van Reenen, 2007). As fixed assets are generally more difficult to liquidate, firms are reluctant to invest in this area during periods of elevated uncertainty because their sensitivity to demand shocks would increase as a result. The tendency to postpone this type of spending when uncertainty is high reduces the effectiveness of policies aimed at stimulating investment, and more aggressive policy actions are required. (Bloom, Bond, and van Reenen, 2007; Bloom, 2014).

While uncertainty seems to have partially subsided after the initial shock in March 2020, it is still elevated and is likely to remain so for some time (Figure 5). Early evidence suggests that higher uncertainty is taking a toll on business investment (Figure 6). The share of respondents in the EIBIS 2020 that say uncertainty is a major obstacle to investment explains about one-sixth of the decline in total investment in the first half of 2020. Similarly, differences in respondents’ views about their business prospects, which is arguably another measure of uncertainty, explains around 13% of the variation in aggregate investment across countries.

Figure 4

Real GFCF and COVID-19 containment measures

Source: EIB staff calculations based on data from Eurostat, OECD national accounts, Oxford COVID-19 Government Response Tracker, Blavatnik School of Government and Google community mobility reports.

Note: The OxCRGT stringency index records the strictness of “lockdown style” policies that primarily restrict people’s behaviour. Higher values indicate more restrictions. The Google index tracks visits to the workplace and shows the deviation in mobility on a given day from the median value, for the corresponding day of the week, during the five-week period 3 January to 6 February 2020. A higher, less negative number indicates mobility that is closer to usual. Both indices are daily and averaged over April, May and June.

Figure 5

Euro STOXX 50 volatility index provides a forward-looking measure of uncertainty

Source: Refinitiv Datastream and EIB staff calculations.

Figure 6

Investment growth in Q2 2020 and measures of uncertainty

Source: EIBIS 2020, Eurostat, OECD national accounts and EIB staff calculations.

Lockdowns and social distancing across the European Union have led to a large decline in corporate cash flows because firms are not able to reduce costs proportionally to the decrease in revenues (Chapter 3). Figure 7 shows the steep decline in the gross entrepreneurial income of non-financial corporations, which is the closest approximation in the European System of National Accounts to aggregated firm-level cash flow. The decline was more than twice the falloff seen in the past two recessions, one which was sparked by the global financial crisis and the other by Europe’s sovereign debt crisis. Lower cash flows mean lower liquidity which will eventually undermine the net worth of firms, affecting their ability to borrow and invest. Expectations that firm’s net worth will decline are already affecting investment decisions, but that negative sentiment will intensify in the coming year. A lack of investment could push down firms’ net worth even further, creating a negative loop.

Figure 7

Gross entrepreneurial income of non-financial firms (% change vs. a year ago)

Source: Eurostat.