News & Events


  • US capital investment up by 33% in five years – well ahead of G7 average of 11%
  • China increases capital investment by 73%
The US is powering ahead of the world average in terms of capital investment in its economy’s business resources and public infrastructure, strengthening its future growth prospects, reveals a new study by UHY, the international accounting and consultancy network.

According to UHY, the US has seen capital investment increase by 33% over the last five years* to $3.7 trillion in 2015 (latest figures available), which equates to 20% of its GDP in 2015. The US increase compares favorably against both the global average, which has risen by 21.1% over the same period, and the G7, which has seen a 11% increase.

UHY says higher capital investment levels are an indicator that businesses are positioning themselves to expand capacity, to improve productivity, or to move into new markets by opening new sites. They also reflect governments’ support for growth by improving the transport links, more efficient power generation capacity and other vital infrastructure that businesses rely on.

The UHY study looked at “gross capital formation” - or capital investment - in 41 major economies around the world, measuring trends over a five-year period, and comparing investment levels to their Gross Domestic Product (GDP).

Gross capital formation measures spending on assets such as IT systems, new equipment and machinery, and investments in infrastructure projects by governments. The UHY study compares it to GDP in order to put it into context against the size of a country’s economy.

UHY says that since the 2016 Presidential election, President Donald Trump has indicated he plans to allocate even more resources to improving the country’s infrastructure.

UHY says that maintaining a high level of investment in infrastructure is critical, as the US Department of Transportation estimates that more than two thirds of roads in the US are in “less than good condition,” and that nearly 150,000 bridges need repair.

By contrast, European countries on average have seen capital investment decrease by 5.5%.

The G7 is also seeing a slower rate of increase than the global average, raising capital investment by an average of 11.1% over a five-year period. However, the average amount invested by G7 economies is still substantial – at over $1 trillion in 2015 (or 20.7% of GDP).

At the top of the table, China has increased capital investment by 73% to $5 trillion - equivalent to 45% of its GDP. UHY says that China’s extremely high levels of investment in recent years have helped underpin its long run of robust growth, which remains comparatively high, at 6.9% in 2015**.

Alongside a wide range of major public infrastructure projects helping improve productivity and competitiveness, businesses in China have been rapidly expanding capacity and investing in innovation to strengthen their position in the global marketplace.

Comments Dennis Petri, Managing Director at UHY Advisors: “Capital investment is vital in paving the way for economic growth, and the US is actively taking steps to stay ahead.”

“The US is outpacing a range of both developed and emerging economies. While in many developed economies, businesses’ and governments’ ability to invest was hit by recession, activity in the US has remained far more robust.”

“Companies in the US have positioned themselves for growth by allocating more capital to investment projects as they sharpen their competitive edge.”

“It’s critical that the government continues to pro-actively support business investment, especially by enacting measures to help small businesses, such as grants for start-ups or tax breaks for R&D or capex.”

“The Department of Transportation has had its own say on the state of American infrastructure, so it is important the government maintains its commitment to spend on its infrastructure, whilst also providing incentives for businesses to do the same.”

 

 

 

*2010-2015 Gross Capital Formation. Source: World Bank & German Statistical Office
**Source: World Bank