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World Telecoms and Technology Outlook 2nd Quarter

  • ID: 2139307
  • Report
  • April 2013
  • Region: Global
  • 20 Pages
  • The Economist Intelligence Unit
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Rising political risks are combining with fading economic performance in key countries to dampen the global business and financial outlook. A sharp increase in tensions on the Korean peninsula has emerged as the greatest geo-political risk: a military conflict between the two Koreas, which inevitably would involve the US, would shred economic and investor confidence in the region and push key parts of the world economy back into recession. Although we expect Korean tensions to stop well short of war, they come at a time of mounting pressures on other fronts. Virtually no progress has been made between Western powers and Iran over its nuclear programme; China and Japan remain at odds over ownership of a small group of islands, and the civil war in Syria continues to pose a spill-over risk within the region. Tensions within the euro zone over bail-outs and fiscal austerity leave the region vulnerable to political miscalculation-Cyprus is the latest example-and the seemingly endless budget showdowns in the US between the two political parties threaten to hold back what otherwise appears to be an improving economic outlook.

These political tensions come at a time when key parts of the global economy are struggling to regain momentum. The Economist Intelligence Unit has argued for some months that the outlook for the global economy would improve in the second half of the year as depressed industries-mainly housing, construction and car production-recovered, financial markets stabilised, consumer confidence improved, central bank liquidity boosted asset prices and global trade accelerated. Many of these things are still in prospect, but expectations of a synchronised upturn now seem much less likely. Among the major developed economies, the US looks by far to be the most promising. Despite some softening in March, the US first quarter seems to have been strong by recent standards. The outlook is also improving, if fitfully, for BRIC stalwarts India and Brazil, and a handful of smaller emerging markets, especially in east Asia, are on an upswing. Yet the outlook elsewhere is, at best, uncertain and in some cases is actually deteriorating.

The euro zone remains the greatest concern. While the risk of a catastrophic break-up has, in the short term, subsided, the after-effects of years of accumulated debt and the onset of brutal austerity has left most economies in the region with no growth momentum. Indeed, we are this month lowering our 2013 GDP outlook to -0.7% from -0.4% previously. Hence, the euro zone in 2013 will be in recession for a second straight year, and this protracted economic malaise will deepen concerns about public support for the single currency over the medium term. We are also cutting our forecast for China, where the economy grew by a slower than expected 7.7% in the first quarter, and for Russia, where consumer confidence, retail sales and business investment are all lagging.

Industry List: Telecoms, Telecoms and Technology
Industry Codes (NAIC): 517
Industry Codes (SIC): 48
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World Telecoms and Technology Outlook 2nd Quarter

World growth and inflation
Political pressures as well as economic woes threaten the global recovery
A second half pick-up in growth is now less likely
Conflict on the Korean peninsula could result in catastrophe
Economic policy feuds are undermining business and consumer confidence
Global GDP growth in 2013 will be no better than the year before
The Bank of Japan is the latest central bank to take unconventional measures
The euro zone continues to struggle economically and politically
US growth outlook is reasonably strong
China's economy continues to grow, but the recovery is fragile

World telecommunications outlook

World telecommunications outlook: Key forecasts

World telecommunications outlook: Infrastructure and networks
Capex will rise substantially, fuelling fibre and mobile network expansion
LTE networks will proliferate
Returns on infrastructure investments will remain uncertain
Cable and internet competitors will continue to spur disruption, increasingly in operators' backyards

World telecommunications outlook: Services and content
Mobile and broadband subscriptions to grow rapidly
Operators will increasingly position themselves as something more than telecommunications companies
Mobile banking will grow in popularity, especially in emerging markets

World telecommunications outlook: Connected devices
PC penetration will grow and usage will remain steady, despite threat from tablets and smartphones
The Apple-Samsung global smartphone duopoly will be challenged by local rivals in emerging markets
Operating systems will be an important battlefield in the war between telecoms operators and the over-the-tops

World telecommunications outlook: Policy and regulation
China will open the door to market forces, slowly
Consolidation likely for the US
Mexico to undergo radical reforms to drive foreign investment
European operators to partner on networks under the regulator's approving eye
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Note: Product cover images may vary from those shown