Gross Fixed Capital Formation

Gross Fixed Capital Formation measures the value of acquisitions of new or existing fixed assets, such as machinery, buildings and infrastructure, by businesses, governments and households in a period, minus the value of any fixed assets disposed of, and excludes land sales and financial assets. It captures how much of an economy's newly created value is invested in productive capacity rather than consumed, and is widely read as an indicator of business confidence and of the economy's likely future growth path, since firms tend to increase fixed investment when they expect demand to grow and cut it back when they expect a downturn. Gross fixed capital formation is one of the standard expenditure components used in compiling gross domestic product.