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ICT industry poised to rebound

20 October 2009

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OECD’s publication The impact of the crisis on ICTs and their role in the recovery explores the challenges faced by the ICT industry during the economic downturn. The document highlights the impact of crisis packages on the sector and the need for refinement of policies for faster recovery.

The impact of the crisis on ICTs and their role in the recovery

Publisher: Organisation for Economic co-operation and Development, August 2009

The ICT industry had a tough start to 2009, with almost all first quarter indicators declining, often very sharply.

Image credits: Queensland Governmnet/ ICT services

The 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.

ICT employment has also trended downwards, but not as rapidly as in automobiles.

The economic crisis has battered the ICT industry over the past year, the report says. Production plunged by as much as 40% on an annual basis in Japan, Korea, Chinese Taipei and other Asian economies in early 2009 as exports collapsed.

The document highlights that most countries posted positive month-on-month production growth in May and June and inventories have been run down sharply after historically rapid build-ups.

Billings for semiconductor makers, a bellwether for the ICT industry, are rebounding sharply after a severe collapse in orders reminiscent of the 2001-2002 dotcom bust.

Asian ICT exports are also growing again month-to-month: Korean producers have been helped by a weaker currency, with production in May down only 3% on the previous year, and Chinese ICT production, which has remained remarkably resilient despite exports dropping by over 20%, grew at nearly 3% year-on-year in May.

ICT production levels in May and June still remain down significantly from 2008 in most countries as the recent uptick has not countered the full year slide.

The production decline at US and European manufacturers appears to have bottomed out, but a significant rebound is not yet underway.  In the US, for example, production in June was down 15% year-on-year but stable from the previous month, and Germany had also bottomed out but is down around 20%.

The economic stimulus packages to address the economic crisis seemed to affect the ICT sector directly and indirectly.

The immediate aim of these packages has been to restore the health of the banking sector and stimulate demand in the short-term; re-financing banks, injecting cash into the economy and protecting jobs. These measures may help counteract downward pressures on the ICT sector and sustain the diffusion of ICTs.

In recent the ICT policies have been increasingly integrated into broader strategies to use ICTs, the Internet and other networks to achieve growth, employment and wider socio-economic objectives.

Source : OECD

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