The unfolding state of the economy 2010
As we move into 2010 and a period of slow, cautious growth in B2B markets, negative memories of the past 18 months will definitely remain and they will have a powerful influence on buying-decisions.
This means it’s essential to generate brand messages that are not only credible, relevant and compelling, but also highly reassuring to each component of your overall market.
The following extract is from an article by Cees Bruggemans, Chief Economist of First National Bank. Register for his free e-mail articles on www.fnb.co.za/economics
The outlook for 2010 should production-wise see a steady recovery in manufacturing activity, probably increasing at a pace of 5% plus. Domestic motor vehicle sales are projected to grow by 7%, with subsidiary parts of the motor trade (used cars, parts and accessories) showing even firmer recovery.
Car exports should gain 30% and total vehicle production should grow by 17% in 2010, importantly supporting manufacturing output gains.
Mining, retail sales, building activity and electricity are more difficult to call. Given global recovery trends, mining volumes should rise strongly unless held back by sector-specific reasons. Electricity output should follow in its wake. But it is not obvious how strong these tendencies may prove to be.
Residential building activity should show some gains off very low base levels, even as non-residential activity for now keeps tailing off. Construction should benefit from large turnkey projects (power stations, road building) but one wonders about political tensions at local government level further disrupting activity levels as the political cycle moves from one set of elections to the next.
Along with steady gains in government employment levels, and a more modest revival in private service activity generally, household incomes should be rising this year. This should underwrite an upturn in retail sales volumes, even if mostly jobless growth for now may remain a drag on non-durable consumption recovery.
Overall, one is pressed to assume growth modesty, if only because there is so much to be modest about.
A more vigorous recovery profile would require a quicker uptake in business risk-taking, a greater appetite among banks to grant credit and for consumers to increase their debt uptake, and a faster revival in job growth, with fewer sector-specific (mining, construction) drags.
Yet such renewed vigour is to be shown rather than assumed, even if the typical cyclical turn from recession to recovery is with us. And thus we do well to allow for a slow GDP growth coach in the 1.5%-2.5% range, until ‘surprised’ by greater vigour. Hopefully it won’t keep us waiting too long. But then again who can say?
It perhaps does create scope for some more policy support, provided some growth sacrifice isn’t deliberate policy in order to keep the private debt bulge, import bill and inflation bias contained longer term within more acceptable ranges than encountered during 2004-2007.
Then again the economy looks far from entering another outperformance binge shortly, and at least the debt bulge and import bills should remain naturally contained for the time being while the ‘new’ credit and consumption disciplines and fixed investment hesitancy prevail.
Back to The Long Hello: making B2B marketing work for the bottom line
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I was on Yahoo and found your blog. Read a few of your other posts. Good work. I am looking forward to reading more from you in the future.
Tom Stanley