Comparison of Global Stimulus Packages on Infrastructure and Construction

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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:

  1. 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)
  2. 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.
  3. 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.

–Lisa Reisman

Comments (2)

  1. LP says:

    That’s very interesting…

    You know, while I like Obama and his administration, I’m not sure they do a whole lot of outside the box thinking. The prior 8 years shouldn’t be used as any kind of comparison.

    I’m not sure if it was mentioned in this blog or another blog or maybe in my head, but why can’t we fix the auto industry by providing consumers real incentives to buy brand new alternative energy cars. Like maybe a $5K tax credit/rebate on the purchase of a new hybrid or flex fuel car. I’m sure it would cost less than the bailing out these institutions.

    This would force the GMs of the world to produce more efficient cars, marginally improve sales, keep the important dealerships alive, keep a good number of people working through the chain, and most importantly, reduce our dependence on crude while improving the environment.

    Now some may think that it will help Toyota and Honda quite a bit and it may. I bought my Camry Hybrid in 07, partially cause I wanted to do my part and it’s made in America. BTW, I remember buying it for about 1K over a comparably equipped Camry and I made that money back between 07 and 08. Average MPG of 35. True story.

    Now I would have loved to buy a similar hybrid car made by GM or Ford, but I couldn’t find a non-suv comparable cars.

    Dunno just a random thought. Btw, the idea would still force GM to become more viable.

  2. admin says:

    I couldn’t agree more that a specific consumer incentive to buy the “right” kinds of cars would have been so much more beneficial to the economy as a) it would go directly into the hands of producers and their suppliers b) we could measure the impact more effectively (I can’t see how we can measure the impact of the bail-outs) and c) we can incent the “right” kinds of purchases to grow our own energy independence….LAR

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