One question we often hear relates to when will the stimulus package impact US domestic demand followed by the second question, where specifically will we see the stimulus, both of which have largely been answered. We examined much of the US stimulus package several weeks ago in this post. But rarely do we hear the question, what do other countries’ stimulus packages contain?
Deloitte (my last corporate stint) recently published a Global Metals Outlook report and right there on page 7 (the last page of the second installment of their series) appeared a breakdown of stimulus packages by country. Readers can download the entire report right here. This particular report had some interesting nuggets if for no other reason but to hear the different perspectives on metals demand from around the world.
Here were some of my own observations:
- Most of the automotive incentives from other countries went to consumers to encourage purchases as opposed to monies provided to the OEM’s (the US and Germany both appear to provide incentives to car-makers instead of to consumers)
- Only Russia and China appear to provide specific export incentives. In the case of China, some alterations to their moderately flexible export tax policies, (which also includes increased export VAT rebate hikes, as we have also previously reported). And in the case of Russia, credits which go toward India and China for buying Russian machinery and equipment.
- And perhaps the most shocking finding ¦the percentage of stimulus dollars allocated to infrastructure and construction. Using the Deloitte study numbers, Russia allocates the least (zero) to infrastructure and construction, followed by South Korea at 2%, the US at 6.7% and the UK at 13%. If you toss in the transmission grid and renewable energy tax cuts for the US, then the US total percent of spend on infrastructure and construction increases to 9.8%.
Now looking at three above, when the comparison is made to China whereby 56% of the dollars went toward infrastructure and construction (France at 32% and Germany at 37% represent the middle, no information was available for India) it does raise some questions as to where the US dollars went (actually, tax cuts and the banking sector). And in all fairness to the US package, each country’s package should be measured against total GDP per country and dollars earmarked toward stimulus in general. I didn’t do the math on that one. Hmmm….
Check out the Deloitte study for further details.