According to a new report by Standard & Poor’s, the global expenditure on machinery and investment has started falling and could record a fall of 5.4 per cent during 2014.

The report said that the world’s 2,000 biggest companies have started cutting capital investment following a slowdown in China and a collapse in Latin American countries. Standard & Poor’s Gareth Williams said that the capital investment cycle is showing that the recovery might have concluded and the global economy might see falling investment.

Experts say that the plans for capital investment act as a future predictor of the state of the economy and a fall in global capital investment not only affects outlook for the economic growth but also poses a risk of a recession. The International Monetary Fund has already reduced its forecast for the global economy to 3.1 per cent after it downgraded Russia, Brazil, South Africa, India and Mexico, as well as Italy and Germany.

“This is a pretty troubling snapshot of the global economy and it shows endemic lack of confidence. Companies are still worried, and there still is excess capacity in autos and other industries,” said Mr Williams.