Industrial investment: Europe lags behind Asia and the Americas

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Europe continues to lag behind Asia and the Americas in attracting new industrial investment, but is clearly ahead of the rest of the world in the quality of investments that are more energy and environmentally efficient, according to the 8th Global Industrial Investment Barometer.

Overall, industrial investment will stabilize globally at $1 306 billion over the period covering the second half of 2022 and the first half of 2023 (+4.9% over the previous comparable period), according to the indicator published by Trendeo, Fives, the Institute for Reindustrialization and McKinsey.

Since 2016, this index has measured investment trends internationally, both in new and existing businesses.

Over the period studied - from the second half of 2022 to the first half of 2023 - 54.5 percent of global investment was in Asia ($711.3 billion), 28.5 percent in the Americas ($372 billion) and only 10 percent in Europe ($129.4 billion), the study said.

The index shows that investment remains broadly stable in Asia compared to the 2016-23 average (54.7%), is growing in the Americas (28.5% compared to 22% of the 2016-23 average) and declining in Europe (10% compared to 11.8%).

The decline in Europe has mainly affected Russia and the UK, but has not affected the European Union itself, where industrial investment totaled $87 billion over the period, representing 6.7% of global investment (the EU attracted 6.5% of investment over 2016-23).

Despite the low volumes, Europe has a virtuous investment logic in place, with specific measures to protect the environment, reduce energy consumption and utilize digital technologies, Trendeo reported.

In Russia, investments between 2022-23 are down 85% compared to the 2016-2022 average and 62% in the UK. In Germany, they decreased by 16% and increased by 39% in France.

The African continent and Oceania showed a downward trend. The African continent accounted for 5.7% of global industrial investment ($74.3 billion) (7.8% on average over 2016-23). Oceania received $18.8 billion, or 1.4% (3.7%).

Industrial investment in Europe is expected to grow gradually in the coming years. The following factors will contribute to this:

  •  Green economic transformation. Europe aims to achieve carbon neutrality by 2050, which will require significant investments in new technologies and infrastructure.
  •  Digitalization. Industry 4.0 opens up new opportunities for automation and increased productivity.
  •  Growing demand for European industry products. Due to their high quality and innovation, European goods and services are in demand worldwide.

However, to realize this potential, Europe needs to address a number of challenges, including:

  •  Insufficient investment in research and development.
  •  High production costs.
  •  A shortage of skilled labor.

Addressing these challenges will enable Europe to maintain its position in global industry and become a leader in sustainable development.

Jonathan Rowe

Jonathan Rowe

The creator and main author of the site is Jonathan Rowe. Trader and investor with many years of experience. A graduate of the Massachusetts Institute of Technology with over a decade of experience developing applications for financial and investment institutions.

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