Report
The question of capital destruction
The COVID crisis and the energy transition will lead to significant capital destruction in sectors where demand will be permanently lower or where the nature of goods produced will change: energy, automotive, office real estate, transport, retail, etc. It is therefore important to examine the effects of capital destruction: Not inflation, if the capital destruction is accompanied by a fall in demand; In the short term, a fall in potential GDP and in income; A rise in the savings rate due to the loss of wealth. Such a rise will be welcome, as there is also a need for more investment to build up capital in the sectors into which demand is shifting (renewable energies, electric cars, residential real estate, online retail, health care and pharmaceuticals, etc.); An increase in structural unemployment, if wage earners who worked with the capital destroyed lack the skills needed to work with the new capital gradually being introduced.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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