Global Capital Expenditure Growth to Plummet 11% in 2025 Second Half

Global capital expenditure, which surged in the first half of 2025, is expected to significantly cool down in the second half of the year, with the United States being particularly affected. This shift is attributed to the waning of the "front-loaded" purchasing and technology investments that initially drove the surge. According to a report, global capital expenditure rose by 14% in the first quarter of 2025. However, the growth rate is projected to plummet to 0-3% in the second half of the year. In the United States, capital expenditure could even contract by 5%.

The anticipated slowdown is due to several factors. The initial surge in capital expenditure was largely driven by companies accelerating their purchases in anticipation of future economic uncertainties. As these front-loaded purchases taper off, the growth in capital expenditure is expected to decelerate. Additionally, the report suggests that the Federal Reserve's monetary policy, which includes a series of interest rate cuts starting from September 2025, will further contribute to the cooling of capital expenditure. The Federal Reserve is expected to implement three rate cuts of 25 basis points each, beginning in September.

The slowdown in capital expenditure is not limited to the United States. Other regions are also expected to experience a similar trend, although the impact may be less pronounced. The global economic landscape, characterized by rising inflation and geopolitical tensions, is likely to influence corporate investment decisions. Companies may adopt a more cautious approach to capital expenditure, focusing on cost management and operational efficiency rather than expansion.

The cooling of capital expenditure in the second half of 2025 is expected to have broader implications for the global economy. A slowdown in capital expenditure could lead to a reduction in economic growth, as businesses invest less in new projects and technologies. However, it could also provide an opportunity for policymakers to address structural issues and promote sustainable economic growth. The Federal Reserve's interest rate cuts, for instance, could stimulate consumer spending and support economic activity in the long run.

In summary, the anticipated cooling of global capital expenditure in the second half of 2025, particularly in the United States, reflects a shift in corporate investment strategies. The initial surge in capital expenditure, driven by front-loaded purchases and technology investments, is expected to decelerate as these factors wane. The Federal Reserve's monetary policy and the broader economic landscape are likely to influence this trend, with potential implications for economic growth and policy-making.