Thursday, September 27, 2012

Fitch Cuts Forecast for Global Growth, will Mobile be Affected?

Communications and entertainment services are not immune to broader economic downturns, though consumer spending on communications and video services seems to have been affected in subtle ways during the Great Recession of 2008 and its aftermath which has seen sluggish growth in many regions, and an actual contraction in Europe. 

The impact of the Great Recession beginning in 2008 is easy enough to describe. According to TeleGeography Research, revenue growth slipped from about seven percent annually to one percent in 2009, returning to about three percent globally in 2011.
It isn't clear yet whether another recession, of broader scale, is coming. But it is reasonable enough to assume stubbornly tough conditions will endure for a few years. 

That should mean less spending, on a typical account, but not fewer subscriptions. 



Fitch Ratings has pared back its forecasts for global gross domestic product growth to 2.1 percent, citing “persistent weakness” in the global recovery. That is down from Fitch’s June view of 2.2 percent. For 2013, the forecast was reduced to 2.6 percent from 2.8 percent.

Fitch  lowered its 2013 GDP growth expectations for the United States to 2.3 percent, but kept its 2012 forecast at 2.2 percent. Persistently high unemployment and the uncertainty surrounding fiscal policy are expected to continue to challenge the U.S. economy.

U.S. growth in the second quarter also has been adjusted downward. Growth was 1.3 percent, down from a previous estimate of 1.7 percent, due to less consumer spending and business investment than previously estimated.

Fitch predicts the eurozone economy will contract 0.5 percent in 2012. Growth of only 0.3 percent and 1.4 percent is predicted for the next two years.

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