Global economic growth is expected to slow in 2005, signalling lower advertising growth, with a predicted global increase of 4.5% in the coming year, according to analysts Merrill Lynch. Europe, however, is forecast to do well with Merrill estimating European ad growth for 2005, to increase by 4.2%, compared to 4% in 2004.
GDP Growth
Merrill Lynch has posted a conservative forecast for global GDP, estimating 3% real growth for 2005, compared to 4% for 2004. Europe is forecast to see real growth of 1.8% in both 2004 and 2005 (2005 consensus forecast is 1.9%). This is below Merrill’s previous forecast of 2.2%. The UK is predicted to see 2.8% GDP growth in 2005, down from the 3.4% growth rate it enjoyed in 2004.
Merrill’s 2005 GDP forecast of 3.2% (3.0% previously) for the US, indicates US growth slowing in the coming year. However, Merrill has been conservative with its prediction and the consensus estimate for US GDP in 2005 is higher, at 3.7%.
The dollar continues to be weak into 2005, although Merrill’s strategists see the dollar rallying against the pound in 2005, and expect the dollar to end 2005 close to today’s levels against the Euro. This validates earlier predictions from industry experts, who also believe the dollar will end 2005 on a high (see Steady Economic Outlook For 2005).
Advertising Growth
US adspend is forecast to grow by 4.8% in 2005; a more conservative prediction than Universal McCann’s 6.4% forecast, but ahead of ZenithOptimedia 4.2% estimate for 2005(see Global Advertising Recovery Confirmed).
Merrill has forecast a 4-5% growth in developing markets, with Asia Pacific expected to increase by 5.9% in 2005, in contrast to 4.9% in 2004.
Merrill’s 2004 prediction for European adspend, up 4%, is at the top end of its previous forecast range of 3-4%. 2005’s estimate of 4% is at the lower end of Merrill’s earlier forecast range (4-5%). This compares to ZenithOptimedia’s prediction of 5.4% in 2004 and 4.5% in 2005.
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