The first half of 2014 is drawing to a close but the wait continues for a strong economic upturn that would globally spark sustainable sales growth in the high-tech industry.
So far, what many industry observers and economists can point to is selective growth in certain markets, weakness in others and wide differences in regional performance. All of these point to the likelihood that economic forecasts and corporate sales and profits projections made at the beginning of this year may not materialize.
Economic conditions globally aren't suggesting a roaring second half but neither are they indicative of a softening world market, according to the International Monetary Fund. Anyone looking for strong growth, though, should expect this to emerge only in 2015 rather than this year. Economic activities picked up pace in the first half but not at the level that would have sparked solid, mid-to-upper single digit growth rate. Moreover, the level of demand varies widely by region and even within regional economic zones, the IMF said in its latest World Economic Outlook report.
"The recovery starting to take hold in advanced economies is becoming broader [but] potential growth in many advanced economies is very low," said Olivier Blanchard, counsellor at the IMF in the WEO report. "Although the evidence is not yet clear, potential growth in many emerging market economies also appears to have decreased."
Growth in the electronics industry is uneven, too, although executives are seeing current economic forecasts as encouraging. Officials at the Semiconductor Industry Association (SIA) believes the larger economy is expanding slowly but notes this would be enough to drive chip growth for the next several quarters. Current forecasts from the World Semiconductor Trade Statistics is for global semiconductor sales to expand 4.1 percent this year to $313.6 billion and then up to $327.3 billion in 2015.
"Semiconductor sales performance has become increasingly tied to global GDP performance," said Falan Yinug, director, industry statistics & economic policy at the SIA in a recent blog post. "An improved global macroeconomic environment in 2014 and 2015, as reflected in growth in global GDP, is likely to have a positive effect on semiconductor sales."
The IMF is forecasting the global economy would grow 3.6 percent in 2014, up from 3 percent in 2013 and then rise to 3.9 percent in 2015. Emerging economies are expected to continue driving much of the 2014 growth with China slowing down to approximately 7.5 percent from 7.9 percent in 2013 while the economy of sub-Saharan Africa is expected to improve 5.4 percent compared with 4.9 percent in each of the previous two years. The United States is forecast to rise 2.8 from 1.9 percent while Euro area countries should turn last year's 0.5 percent contraction into a 1.2 percent growth spurt. Other advanced economies should also grow at 3.2 percent versus 3 percent in the prior year, the IMF said.
Concerns abound that even these modest projections may be at risk. Geopolitical disturbances have increased since the second half of 2013 and many of these are threatening to crimp economic growth in various parts of the world. And while the financial crisis of the last couple of years has abated, there are still pockets of concerns even in advanced economies where the IMF is warning of lags in inflation projections due to downward commodity price pressures.
