Investment and Investment Finance in Slovenia

Transcription

1 Investment and Investment Finance in Slovenia Debora Revoltella Chief Economist European Investment Bank Bank of Slovenia, European Investment Bank, European Commission Conference Ljubljana November 16, /11/2017 1

2 Investment decline has been strong, and persistent, particularly for corporates 110 Investment dynamics by assets 110 Investment dynamics by sector f f Dwellings Other buildings/structures IPP Machinery & equipment Corporations Government Households The graph shows the evolution of total Gross Fixed Capital Formation. (in real terms); by institutional sector and asset type. The data has been indexed to equal 100 in For 2017 we use the forecast of the European Commission. Source: Eurostat, European Commission 24/11/2017 European Investment Bank Group 2

3 investment is slowly regaining traction, but the effect of the EU cycle is visible investment in Slovenia (occupational) of GDP investment in Slovenia (institutional) of GDP Health Education Communication Transport Utilities Corporate Government Note: Annual infrastructure investment as a share of GDP, broken down by occupational sector. Source: EIB Econ calculations, Eurostat, national authorities Note: Annual infrastructure investment as a share of GDP, broken down by institutional sector. Source: EIB Econ calculations, Eurostat, national authorities 24/11/2017 European Investment Bank Group 3

4 What can 12,000 firms tell us about investment trends in Europe? EIB investment survey: 12,500 firms surveyed across EU28 (of which 400 in Slovenia) NFCs 5+ employees in manufacturing, services, construction & infrastructure sector Information on: Firm characteristics and performance Investment needs and constraints Past investment activities and future focus Investment finance Representative of the economy (firms weighted by value-added) Data collected from April-July /11/2017 European Investment Bank Group 4

5 Firms expecting to increase/decrease investment in current financial year (net balance,%) Business investment activity is picking up in Slovenia, particularly for the manufacturing sector Investment cycle 28% Low investment expanding Man High investment expanding 23% 18% 13% 8% 3% Note: Plots the share of firms with investment expanding/contracting relative to the share of firms investing, by sector or Member State; cross centred on EU average. BG LT LV EE HU SK CY PL ES PT IT HR DEAT EU UK FR MT GR -2% RO IE Serv -7% Low investment Constr contracting High investment contracting 56% 66% 76% 86% 96% 106% Share of firms investing NL BE CZ SI LU DK SE Infr FI 24/11/2017 European Investment Bank Group 5

6 EU 2016 EU 2017 SI 2016 SI 2017 Manufacturing EU 2016 EU 2017 SI 2016 SI 2017 Manufacturing Slovenian firms invest more in machinery and less in intangibles than the EU average Areas of investment Innovation activity Land, business buildings and infrastructure Machinery and equipment R&D Training of employees Software, data, IT, website Organisation/business processes No Innovation New to the Country New to the Company New to the World Note: Average of responses for allocations by area in : Q. In the last financial year, how much did your business invest in each of the following with the intention of maintaining or increasing your company s future earnings? Note: Average of responses in : Q. What proportion of total investment was for developing or introducing new products, processes, services? Q. Were the products, processes or services new to the company, new to the country, new to the global market? 24/11/2017 European Investment Bank Group 6

7 The share of firms believing that they invested too little in the past is higher in Slovenia than in the EU Perceived investment gap EU 2016 EU 2017 SI 2016 SI 2017 Manufacturing 10 Invested too much Invested too little About the right amount Don't Know/refused Note: Share of responses in : Q. Looking back at your investment over the last 3 years, was it too much, too little, or about the right amount? 24/11/2017 European Investment Bank Group 7

8 EU 2016 EU 2017 SI 2016 SI 2017 Manufacturing EU SI Manufacturing Capacity expansion is becoming the top investment priority Future investment priorities of total investment Capacity utilisation (EIBIS) Capacity expansion Replacement New products No investment planned Note: Share of firms by main purpose of investment, in. Q. Looking ahead to the next 3 years, which is your investment priority (a) replacing existing buildings, machinery, equipment, IT; (b) expanding capacity for existing products/services; (c) developing or introducing new products, processes, services? Note: Average share of responses in : Q. In the last financial year, was your company operating above or at maximum capacity attainable under normal circumstances? /11/2017 European Investment Bank Group 8

9 CY GR AT DE HU IT LU ES FI SI SE NL LV MT EE IE LT BE HR DK CZ PT RO UK FR SK PL BG GR CY AT DE ES HU HR SI PT IE MT IT DK LU RO NL BE BG EE UK CZ SK LV SE FI PL FR LT The quality of the capital stock scores relatively well in European comparison State-of-the-art machinery and equipment average share in Share of high energy efficiency buildings average share in State-of-the-art machinery and equipment High energy efficiency standards Note: Average of responses in : Q. What proportion, if any, of your machinery and equipment, including ICT, would you say is state-ofthe-art? Note: Average of responses in : Q. What proportion, if any, of your commercial building stock satisfies high or highest energy efficiency standards? 24/11/2017 European Investment Bank Group 9

10 Manufacturing Availability of skilled staff has become the key concern in most sectors Long-term barriers to investment Investment barriers by size/sector Demand for product or service Demand for product or service Availability of skilled staff Availability of skilled staff Energy costs Access to digital infrastructure Labour market regulations Business regulations Adequate transport infrastructure Energy costs Access to digital infrastructure Labour market regulations Business regulations Adequate transport infrastructure Availability of finance Availability of finance Uncertainty about the future Uncertainty about the future EU 2017 SI Note: Share of responses in : Q. Thinking about your investment activities, to what extent is each of the following an obstacle? Is a major obstacle, a minor obstacle or not an obstacle at all? Note: Share of responses in : Q. Thinking about your investment activities, to what extent is each of the following an obstacle? Is a major obstacle, a minor obstacle or not an obstacle at all? 24/11/2017 European Investment Bank Group 10

11 EU 2016 EU 2017 SI 2016 SI 2017 Manufacturing EU 2016 EU 2017 SI 2016 SI 2017 Manufacturing Finance is mostly internal finance and bank loans Source of investment finance Type of external investment financing External Internal Intra-group Bank loan Bonds Leasing Non-institutional loans Other Other bank finance Equity Factoring Grants Note: Average of responses in : Q. What proportion of your investment was financed by each of the following? Note: Q. Approximately what proportion of your external finance does each of the following represent? 24/11/2017 European Investment Bank Group 11

12 Certain firms still face financing constraints, but satisfaction with the financing offers improved Share of finance constrained firms EU 2016 EU 2017 SI 2016 SI 2017 Manufacturing 2% 4% 6% 8% 1 12% 14% Rejected Received less Too expensive Discouraged Note: Proportion of firms considering themselves finance constrained: Finance constrained firms include: those dissatisfied with the amount of finance obtained (received less), firms that sought external finance but did not receive it (rejected) and those who did not seek external finance because they thought borrowing costs would be too high (too expensive) or they would be turned down (discouraged) Dissatisfaction with external finance Amount obtained Cost Length of time Collateral Type of finance Note: Average share of responses, in Q. How satisfied or dissatisfied are you with.? 5% 1 15% Slovenia EU /11/2017 European Investment Bank Group 12

13 AT BE BG HR CY CZ DK EE FI FR DE GR HU IE IT LV LT LU MT NL PL PT RO SK SI ES SE UK Transport infrastructure development is the key public investment priority for Slovenian firms Perceived public investment priorities Note: Proportion of responses in : Q. From your business perspective, if you had to prioritise one area of public investment for the next 3 years, which one would it be? Transport infrastructure Transportation ICT infrastructure Energy Childcare/schools Prof training/he Hospitals Social housing Other Refused 24/11/2017 European Investment Bank Group 13

14 Municipality infrastructure gaps exist and impediments related to budget and procedures Add-on survey module for 2017: 555 municipalities were interviewed in all 28 Member States. Central Europe (Czech Republic, Hungary, Slovakia, Slovenia) Key results: In Central Europe, municipalities see a smaller investment gap than the rest of the EU: 75 believes they invested enough in the past years (vs around 5 in the EU). Still of municipalities believe they invested too little. Perceived infrastructure quality at municipal level is slightly above the EU average. The main areas where gaps should be closed in the future are health and housing. Ex ante assessment of projects is more wide-spread than in the rest of the EU. Still, the coordination of projects among the various stakeholders (central level, region, neighboring municipalities) could be improved. Main obstacles for investment: budget, but also length of approval, technical capacity and political and regulatory stability. 24/11/2017 European Investment Bank Group 14

15 Conclusions The crisis resulted in a sizable investment gap, but the recovery of corporate investment has begun. The manufacturing sector is particularly dynamic in expanding its capital stock. Capacity expansion is becoming an important investment objective for firms. While investment is shifted towards tangibles, the manufacturing sector is shifting towards R&D. The perceived quality of the capital stock is good by EU standards. The key barriers to investment are the shortage of skilled staff, uncertainty, and regulatory constraints. Certain firms still face financing constraints, but satisfaction with the financing offers improved. Municipalities could strengthen the coordination between the various stakeholders when it comes to infrastructure planning. 24/11/2017 European Investment Bank Group 15

16 Thank you 24/11/2017 European Investment Bank Group 16