|
Last Updated:
Jul 30, 2009 - 8:55:11 AM |
 |
| Source: OECD
|
The global technology industry may have passed a turning point, the Paris-based Organisation for Economic Cooperation and Development (OECD) said in a report published on Tuesday.
The OECD says the ICT (information and communications technology) industry had a tough start to 2009, with almost all first quarter indicators declining, often very sharply. The reports says there are signs of recovery, with the rate of decline bottoming out and turning up in the most recent cyclical data (May/June 2009), with positive month-on-month growth for most countries, and inventories running down sharply. Performance in the first quarter of 2009 tested 2001-2002 declines in most ICT sectors, but relative year-on-year declines were not a great deal worse than in 2001-2002 and some sectors have performed better than in the earlier period. The ICT industry is also performing considerably better in this crisis than industries such as car manufacturing.
In terms of sectors, the report says revenues of global ICT hardware firms have been more affected early in the economic crisis than ICT services firms (IT services, software, Internet-related and telecommunications), as was the case in 2001-2002. Semiconductors, electronics, communications and IT equipment were hit by slumping business and consumer demand and growth dropped sharply. But ICT services have also slowed, and year-on-year growth of IT services and software both turned negative in the first quarter of 2009, with Internet business growth around zero. Internet and software firms saw steep falls in growth of over 20 percentage points in the last four quarters, in sharp contrast with their recent performance. Overall, hardware sectors such as semiconductors and communications equipment are declining less than in 2001-2002, and in comparison some ICT services are performing worse than in 2001-2002.
Asian firms, particularly in Japan, Korea, Taiwan and China, are leading the sector’s recovery. The report says while production drops were generally sharper in this downturn than in 2001-2002, so was the rebound in the first quarter of 2009. Even Europe and the US, where analysts haven’t yet observed strong signs of recovery, the sector has at least bottomed out, the OECD said.
The OECD said unlike financial-sector firms, which were at the centre of the economic storm this time, most ICT companies have learned the lesson from the dot-com bust and were “in a much stronger position to survive” and continue to invest in innovation thanks to large cash-to-debt ratios on their balance sheets. One notable exception was Microsoft, which had $23 billion in net cash in the first quarter of 2009, down from $39 billion in 2002.
Last week, Microsoft reported its worst year since becoming a public company, in 1985.
The report says governments in OECD and major non-OECD countries are setting up economic stimulus packages to address the economic crisis. The aim of these packages is to stimulate demand in the short term, i.e. re-financing banks, injecting cash into the economy and protecting existing jobs. However, most governments also plan to foster growth through smart investments which have repercussions on the supply-side, helping to restore favourable conditions for innovation and long term growth. In most cases these plans are directly relevant to the ICT sector and technology diffusion, and many include ICT-related elements which should prove a positive stimulus to the ICT sector.
The US plans to spend $7.2 billion to put broadband into rural households, schools, libraries and health-care providers. Some OECD countries, even have a separate “broadband stimulus plan” running parallel to a recovery package; in Italy, for example, that’s valued at around €1.25 billion.
The 30 member countries of OECD are: Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States.
