INSIGHTanalysis: Global Economic Recovery Shapes Up
The global economic recovery now appears to be shaping up, with the US leading the way, according to Jean-Philippe Cotis, chief economist for the Organisation of Economic Cooperation and Development (OECD).
However, the UK is currently one of the stronger of the six largest OECD countries and is expected to remain second only to the US in terms of GDP growth over the course of the next two years. The OECD recently raised its 2004 GDP growth forecast for the UK from 2.6% to 2.7%, reflecting the improved outlook.
Other Eurozone countries, notably Germany and France, remain more slack. In the US, growth peaked in the third quarter of last year, but should remain strong. The US’ GDP growth rates are expected to be significantly stronger than the other G6 countries over the next two years.
Measured by GDP, Japan is outpacing the Euro area at present, with investments and exports buoyed by a dynamic Chinese market. For the full years of 2004 and 2005, Japan’s GDP growth is expected to fall back a little, to 1.8% each year.
| G6 Countries GDP Growth Forecasts | |||
| 2003 | 2004 | 2005 | |
| US | 2.9 | 4.2 | 3.8 |
| Euro area | 0.5 | 1.8 | 2.5 |
| Germany | 0.0 | 1.4 | 2.3 |
| France | 0.1 | 1.7 | 2.4 |
| Italy | 0.5 | 1.6 | 2.1 |
| UK | 1.9 | 2.7 | 2.9 |
| Japan | 2.7 | 1.8 | 1.8 |
| Source: OECD Secretariat, January 2004 | |||
The improving economic conditions will have a positive effect on the advertising sector, with stronger corporate profitability also helping to boost spend.
A consensus of the most recent global advertising forecasts put global growth at 4.7% this year and 4.5% next year. In this consensus the US is expected to lead the way in 2004, at 5.5% growth, after which the Asia-Pacific region will become the strongest area, at 5.7% growth for 2005.
| GLOBAL AND REGIONAL ADVERTISING FORECASTS | ||||||||||||
| US | Europe | Global | Asia-Pacific | |||||||||
| 2003 | 2004 | 2005 | 2003 | 2004 | 2005 | 2003 | 2004 | 2005 | 2003 | 2004 | 2005 | |
| Merrill Lynch (12/03) | 2.7 | 5.8 | – | – | – | – | 2.1 | 5.0 | – | – | – | – |
| Universal McCann (12/03) | 5.2 | 6.9 | – | – | – | – | 4.6 | 5.8 | – | – | – | – |
| ZenithOptimedia (12/03) | 3.0 | 5.1 | 4.2 | 1.8 | 3.7 | 3.8 | 3.4 | 4.7 | 4.5 | 5.1 | 5.1 | 5.7 |
| Initiative Media (01/03) | 3.5 | – | – | – | – | – | 4.5 | – | – | – | – | – |
| Interdeco/Ad Barometer (10/03) | 2.8 | 4.1 | – | -0.1 | 2.5 | – | 1.7 | 3.2 | – | – | – | – |
| Average | 3.4 | 5.5 | 4.2 | 0.9 | 3.1 | 3.8 | 3.3 | 4.7 | 4.5 | 5.1 | 5.1 | 5.7 |
| Source: As above, compiled by MediaTelINSIGHT | ||||||||||||