From 2008 to 2013, the eurozone experienced a sharp decline in investment. Despite a belated turnaround in 2014, total investment is still holding below its pre-crisis level. There are wide disparities between countries. After the crisis, the investment rate dropped off sharply in Spain, for example, but rose in France. The share of investment allocated to intangible assets, notably research and development, has increased to the detriment of tangible assets.
Chart (a) shows short-term dynamics in non-resident net portfolio investments (equities and bonds) following the elections in Brazil, Chile, Colombia and Mexico (ie LAC-4). In Brazil, a rebound occurred after the election which followed a period of increased risk aversion as a result of the truckers’ strike (May 2018) and emerging market sell-off (August/September 2018). However, confidence remains very fragile as Brazil stands out as the country where, on a twelve months rolling sum, non-residents have remained net sellers (chart b). Net purchases have also turned positive post-elections in Colombia and Mexico however with a lag in the latter case owing possibly to concerns over NAFTA and commitment to fiscal responsibility under the new administration
The economic policy uncertainty index, which is based on media coverage of this topic, has seen a huge increase since the middle of last year, even surpassing the previous high reached at the end of 2016. Measures of business uncertainty in Germany and the US have also risen. The dispersion of individual stock returns, a third measure of uncertainty, has also increased in the US and to a lesser extent in the eurozone.