JEDDAH — Global corporate capex increased by a mere 2% last year, and is estimated to expand only 3% in 2019, the latest forecasts from S&P Global Ratings disclosed Sunday. The forecasts further out need to be treated with caution, given that S&P analysis has shown a tendency for market analysts to underestimate capex beyond the first forecast year, but current projections point to a 1% decline in spending for 2020 and 2021.

While the detail of the survey revealed a complex and varied prognosis by sector and region – with positive trends in some regions and many sectors – the broader reality is that corporate capex has been a

perennial disappointment in this economic cycle, and all the more so given large and sustained monetary stimulus, cuts in corporate taxation, and plentiful balance sheet cash. Less pronounced cycles are a

feature across many macroeconomic trends, in developed markets at least, but the hoped-for unleashing of a corporate capex boom remains elusive and seemingly unlikely in the next couple of years.

The latest estimates – which combine public company guidance with S&P Global Ratings analysts' forecasts and market consensus projections – suggest that the mini boom in capex that began in 2017 is waning rapidly.

Nevertheless, the capex outlook remains positive if lackluster. All regions, bar Asia-Pacific ex Japan, are expected to see positive capex growth in 2019). Western Europe is ticking over nicely at 4%

growth, Japan better still at over 7%, and Latin America is set to break a six-year run of declining capex with a large commodity bounce back of 23%. The North American outlook is much more disappointing, with last year’s 9% surge fading to a mere 2% projected for 2019. Asia-Pacific ex Japan is the one region expected to see capex cut, falling an estimated 1% in 2019 after the prior year’s 2% decline. In contribution terms (, the loss of positive momentum from North America is the most notable change from 2018. Fortunately, improving growth in EMEA and Latin America does compensate for this, S&P Global Rating said. — SG