Survey results: why industrial companies are shunning investment

Corporate investment strategies in this period exhibited low sensitivity of investment to lending rates. Companies drew on their capital as the key source of funding investment, the lack of which was key to curbing investment growth. At the same time, the required minimum rate of return is above the weighted average cost of owned and borrowed capital, in a sign that business has financial incentives to implement investment projects.

Non-financial restraints also carried profound implications for businesses. Lowering nominal and real interest rates in the economy combined with improved access to debt funding may be insufficient to speed up industrial investment.

The policy of sustaining macroeconomic stability, chiefly maintaining low inflation, serves to enhance the investment environment and broaden planning horizons. However, the many problems that have accumulated in the economy are pressuring the willingness of business to invest.