POST COVID BOOM LURRING
The mother of all disruptors turned the whole world upside down. As the vaccination campaigns around the world gather more and more momentum there are glimpses of an economic re-boost around the corner. In UAE, nearly 80% of the population is fully vaccinated. At the dawn of ‘Expo 2020’ the UAE has shown its characteristic resilience and rode the storm to reach the opening gates of what would certainly be a new notch towards its vision. Bold geo-political decisions laid another pillar to create an even more dynamic economic environment conducive to business.
For some industries, the COVID pandemic has certainly been very rewarding. Working from home and the resulting surge in the digital economy has driven demand for semiconductors, leaving a shortage that is reshaping investment into the sector. South Korea plans to spend roughly $450 billion, led by Samsung Electronics Co. and SK Hynix Inc., to build the world’s biggest chipmaking base over the next decade.
A global capex boom, post-pandemic era is definitely on the cards. Sceptics would tend to believe that a deepening of the pandemic would curb economic growth, but the statistics are showing a different trend. Capital spending has seen growth in all sectors and regions, with expenditure especially strong in semi-conductors and software.
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% 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% and 121% of pre-recession levels by the end of 2021 and end of 2022, a much faster recovery than previous downturns.
Another dynamo is climate change, which is forcing companies to retool operations as governments push through clean energy policies. A record $174 billion was invested in solar, offshore wind and other green technologies and companies in the first half of this year.
As these new pockets of opportunities come up, we at Pulsar Consulting FZE, are adequately equipped to accompany your business and steering it in the right direction.