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World Electronics Forum
Setting the Scene –
Economic Considerations
Mark Beatson
Director, Innovation Economics, DTI
WORLD ELECTRONICS FORUM
SETTING THE SCENE – ECONOMIC CONSIDERATIONS
Global growth
% growth in real GDP
2004
2005
2006
US
4.2
3.6 (OECD)
3.3
Japan
2.6
1.8 (OECD)
1.5
UK
3.2
1.9 (OECD)
2.2
Euro Zone
1.8
1.3 (OECD)
1.7
Germany
1.1
1.0 (OECD)
1.3
France
2.0
1.6 (OECD)
2.0
Italy
1.2
0.2
1.2
Spain
3.1
3.1
3.0
China (IMF)
9.5
8.5
8.0
India (IMF)
7.3
6.7
6.4
Source: Aug 05 Consensus Economics, OECD & IMF
WORLD ELECTRONICS FORUM
SETTING THE SCENE – ECONOMIC CONSIDERATIONS
Key Drivers of Global Growth
•
Ongoing rapid growth in world trade and investment flows
•
EU-15 reforms successfully; new members continue to catch-up gradually.
•
Japanese deflation comes to an end and growth recovers
•
Emerging markets continue to catch up with the West
– Not just India and China, but increasingly Brazil, Russia, South Africa, Malaysia
etc.
WORLD ELECTRONICS FORUM
SETTING THE SCENE – ECONOMIC CONSIDERATIONS
Key risks
•
Oil price shock
– Extent of resilience still not fully clear
•
US current account deficit leads to a disorderly correction
– Risks to areas where exports have been dominant recently (e.g. EU,
Japan)
– Risks of protectionism
WORLD ELECTRONICS FORUM
SETTING THE SCENE – ECONOMIC CONSIDERATIONS
Longer term challenges
•
Energy and commodity prices
•
Population ageing
•
Extent of opening up of world markets
•
Speed of technology change
WORLD ELECTRONICS FORUM
SETTING THE SCENE – ECONOMIC CONSIDERATIONS
Implications of a challenging
environment
•
For business
– Creating and sustaining value through innovation
– Use of ICT appears to have been major driver of US productivity growth
•
For Governments
– Appropriate framework policies and business environment.
– Investment.
– Targeted policies to address market failures and encourage innovation
processes.