The digital economy

Increasing by 4.7% in 2017, global DigiWorld markets continue to grow at a steady pace, albeit slower than the economy as a whole. Since taking a hit in 2014, growth has remained sluggish for ICT services.

Growth not aligned with the global economy’s revival

If the deployment of electronic communications infrastructure and the steady rise in usage are creating value for the economy as a whole, it is equally clear that the two are not evolving at the same pace. In 2015 and 2016, global ICT markets enjoyed an uptick in growth while the economy as a whole suffered a decline. During those two years, ICT markets grew at the same, if not higher, rate as the global economy. With an increase of 4.7% in 2017, DigiWorld markets are now to the pace of the six or seven previous years, i.e. a growth rate that is, on average, one to two points lower than the global GDP growth rate (in current value). The difference can be explained in part by the very same productivity gains created by new data transmission and data processing solutions.

Productivity gains that are good for consumers

Technological progress, competitive pressure, economies of scale and scope continue to enable increasingly cheaper and higher quality solutions. In every sector, these advancements are making automation and greater agility – i.e. the ability to create value – possible. In a virtuous circle, ICT industries are the prime beneficiaries of these improvements, such that, more than any other sector, they have managed to translate them into internal savings and in a way that benefits consumers, both individuals and businesses. Every study on price development agrees that hedonic prices in the ICT sector have dropped much more quickly than in any other sector: in most cases, we have seen a decrease whereas the price of other utilities (energy, transport) have tended to increase.

Very unequal economic weight, depending on region

Representing 4.6% of global GDP in 2017, the weight of DigiWorld markets in the global economy has been decreasing slightly year after year. More significantly, the situation differs a great deal from region to region. In North America, digital services account for a greater share of the economy (6.3% of regional GDP) but for considerably less in Latin America and in Africa/the Middle East (3.4% and 3.5%, respectively). It is striking that it is also in these last two regions that ICT’s relative weight in the economy may decrease the most in the years ahead.

The hedonic price index method is based on the fact that the price of goods in a given market is affected by a product’s characteristics. A hedonic price is a price that is calculated based on all of a product’s constituent characteristics.

 
Steady but moderate growth
 
DigiWorld market growing more slowly than the economy as a whole