Prospects of the ICT sector in Greece

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Study of the ICT sector in Greece: Current Situation and Future Trends Deliverable 14: Prospects of the ICT sector in Greece-policy implications In the last section a grid of proposed directions and proposals is presented. These proposals concern: a) the actions of the sector’s firms and b) proposals at the level of public policy. Policies affect the ICT sector is two ways: first, affecting either directly or indirectly the demand for ICTs products/ services, and second, determining the general characteristics of the firms’ business environment. These proposals touch upon both the specialized public policies for the Information Society (IS) and broader actions that are related rather indirectly to ICT firms but affect the domestic environment. The deliverable is also includes three appendices, which incorporate several observations of the previous publications. 3. The broad economic environment The following section presents the current macroeconomic conditions of global and Greek economies, in order to examine the framework within which the domestic ICT sector is developed. The short-term economic conditions are one of the basic factors that will have an impact on the activity of the sectors being studied. If the economic developments are positive, it should be expected that the ICT sector will grow, under the condition that firms will be in the position to exploit the opportunities. Thus, the sector’s prospects are dependent on the international and domestic environment within which the ICTs firms operate, but also on their specific characteristics and strategies that will define their capability to respond to these changes and new conditions. 3.1. Global and European Economy 3.1.1. The Global Economy In recent years the global economy is undergoing rapid growth. However, the growth rates of developed and developing economies considerably differentiate, as the later’s rates are more than double than the former (Table 1). It should be noted that China grown during 2005 at a rate of more than 10% in comparison to the 3.2 % of the USA. This drift gradually changes the importance of the relevant markets, as the commercial flows from and to the developing countries are increasing (faster rates of imports and exports). This implies the increased importance of the developing economies for the global demand, and the global economy. In 2007, the global economy is predicted to keep on growing at a high rate, although at a slower rate than in 2006. The rise of the world trade also presents a proportional deceleration. Nevertheless, these optimistic estimations are dependent on a number of economic and political perplexities that may influence the global economy. The possible increase of the rate of interests, oil price, and the inflation are indicative of an economic insecurity. Furthermore, the continuing war operations at the broader area of Iraq and the development of international terrorism are fundamental factors of political perplexities. October 2006 Observatory for the Greek IS 10
Study of the ICT sector in Greece: Current Situation and Future Trends Deliverable 14: Prospects of the ICT sector in Greece-policy implications 3.1.2. The European Economy In EU- 25 and Euro zone, growth slowed down in 2005, because of a large decrease of the net exports. Consequently, it was shaped to 1.6% and 1.3% respectively (from 2.4% and 2.0% in 2004). This fact is attributable to a slowing down of global trade, which influenced demand. It is also due to the euro revaluation, which worsened Euro zone’s competitiveness and led to a substantial slow-down in exports. At the same time, oil price increases contributed to the retention of inflation at a rate more than 2%. Table 1:International Environment – IMF (real annual % change) 2004 2005 2006 2007 GDP World 5.3 4.9 5.1 4.9 Advanced Economies 3.2 2.6 3.1 2.7 USA 3.9 3.2 3.4 2.9 Eurozone 2.1 1.3 2.4 2.0 European Union 2.4 1.8 2.8 2.4 Japan 2.3 2.6 2.7 2.1 Canada 3.3 2.9 3.1 3.0 Other emerging market and developing countries 7.7 7.4 7.3 7.2 Africa 5.5 5.4 5.4 5.9 Sub – Sahara 5.6 5.8 5.2 6.3 Central and eastern Europe 6.5 5.4 5.3 5.0 Commonwealth of Independent States (CIS) 8.4 6.5 6.8 6.5 Russia 7.2 6.4 6.5 6.5 Developing Asia 8.8 9.0 8.7 8.6 China 10.1 10.2 10.0 10.0 India 8.0 8.5 8.3 7.3 ASEAN4 5.8 5.1 5.0 5.6 Middle East 5.5 5.7 5.8 5.4 World Trade Imports Advanced Economies 9.1 6.0 7.5 6.0 Other emerging market and developing countries 16.4 11.9 13.0 12.1 Exports Advanced Economies 8.8 5.5 8.0 6.0 Other emerging market and developing countries 14.6 11.8 10.7 10.6 ASEAN4: Indonesia, Malaysia, Philippines Thailand ΜΕΝΑ (Middle East & North Africa): Algeria, Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Libya, Morocco, Omar, Qatar, Saudi Arabia, Syria, Tunisia, United Arab Emirates and Yemen. Asia: All countries except Japan and the Asia MENA countries Sub-Saharian Africa: All countries except the African MENA countries Source: IMF, World Economic Outlook, September 2006 October 2006 Observatory for the Greek IS 11
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