High-Tech after the world financial crisis

Clearing up after the financial storm after the last weeks, we see a rather different world economy. After the stock and currency revaluations, only 36 of the 100 firms with the largest market capitalisation have headquarters in the US. In Europe there are 48. Despite (or perhaps because of) the huge volume of US dollars pushed out onto the markets the ‘green back’ is falling again. As a result, commodities prices in dollars will rise. That will push up prices in the US, and especially the price of imports.

That means that economic growth will move power (both spending power and political power) around the world. The Chinese consumer, rather than the US, will be the key consumer for export-led growth for many countries. In Australia, as in Africa and Asia, the US will recede in importance. The BRIC economies will remain able to grow, probably at a slower rate than before, even if the US experiences a long recession.

However, these are long-term trends. For 2008, we maintain our view at the start of the year that the world economy will continue to grow. While profit margins will be tightened in the US, we don’t think that there will be a prolonged recession there.

This means that three trends will reassert themselves:

  1. Exports will be concentrated in the growth markets.
  2. AR managers need to readdress international markets. While analyst influence remains low in China, analyst influence will continue to grow in other Asian, Arab and Latin American markets. Analyst firms will continue to expand their staffing their and, because buyers’ needs differ, analysts will often give different guidance in growth markets from that of their colleagues in mature markets.
  3. The relationship-building approach we have called ‘Recession AR‘ will mean that the focus has to shift towards helping analysts with their personal medium-term goals as well as their short-term research priorities. The short time-orientation of Twitter needs to be supplimented with a long-term, appreciative inquiry, approach towards helping analysts.

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