Is the euro area investing enough?

Abstract

Since the global financial crisis, investment growth in the euro area has been modest compared with peer economies. It has also been heterogeneous in terms of both investment components and sectors, and has been increasingly focused on intangible assets. Investment in research and development, which is important for productivity, has grown more slowly than in peer economies. The sluggish investment growth in the euro area cannot be attributed to a lack of savings, as there is a substantial structural surplus in the current account. It instead appears that the euro area has a shortage of sufficiently attractive opportunities to invest.