The recovery in business investment – drivers, opportunities, challenges and risks

Malin Andersson, Claudia Di Stefano, Yiqiao Sun and Francesca Vinci

Economic Bulletin Articles, 2022, vol. 5

Abstract: This article takes stock of the impact of the coronavirus (COVID-19) crisis on business investment dynamics in the euro area and presents evidence on the main drivers of investment, as well as the opportunities, challenges and risks for its recovery, also in investment with respect to digitalisation and greening needs. Euro area business investment fell sharply in the first half of 2020. The considerable rebound and subsequent investment dynamics have been heterogenous across countries and types of investment, and the rebound has been overall somewhat weaker in the euro area than in the United States. While the recovery has been helped by substantial support from monetary and fiscal policy, headwinds such as increased uncertainty, commodity price rises and lingering supply bottlenecks risk delaying investment decisions and leading companies to further increase savings. Meanwhile, spending on further digitalising and “greening” the economy, as reflected in available investment data, has accelerated throughout the pandemic. Investment opportunities in these areas are considerable, and so are the challenges, which are mainly related to financing, regulation and incentives. JEL Classification: D25, E3, E22, Q55

Keywords: Business investment; COVID-19 pandemic; green investment and innovation; intangible investment (search for similar items in EconPapers)
Date: 2022-08
Note: 427284
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