Insights #12: The end of an era? Corporate capital costs are ratcheting up. How is this playing out across countries and sectors over time?
As central bankers have lifted interest rates to restore their inflation-fighting credentials, the capital costs of firms have risen as well. We find that funding costs are currently much higher for Western firms than for their Chinese and Japanese counterparts. Firms in the energy and IT sectors face particularly changing circumstances. The increase in capital costs between Q2 2022 and Q2 2023 were largest in Russia and South Africa. Capital costs for Italian industrial and energy firms spiked, too.