Thursday, November 5, 2015
EU economy set for 'modest' recovery; FB has a billion daily users and rising mobile ad sales; India home to most confident consumers
1 EU economy set for ‘modest’ recovery (BBC) The economic recovery within the European Union and the eurozone should continue at "a modest pace" next year, the EU has forecast. The economy of the 28-nation EU is set to grow by 1.9% this year, 2.0% in 2016 and by 2.1% the year after. The 19-nation eurozone is expected to grow by 1.6% this year, rising to 1.8% next year and 1.9% in 2017.
The EU said growth was being helped by factors such as low oil prices and a weaker euro exchange rate. Another factor cited was the European Central Bank's attempts to stimulate the eurozone economy through its bond-buying programme.
However, the report also warned that new challenges to growth were appearing, including the slowdown in China and emerging market economies, and geopolitical tensions.
The EU's executive arm expects three million migrants to arrive in Europe by 2017 as they flee war and poverty in Syria and other conflict zones. It predicts the increase in labour supply could boost GDP growth in the medium term provided the correct policies are in place.
2 FB has a billion daily users and rising mobile ad sales (Sam Thielman in The Guardian) Facebook now averages 1.1 billion users a day, according quarterly results announced on Wednesday, which also revealed the company made more money on mobile advertising alone than the whole business took in during the same period last year.
When its flagship product hit the billion-user milestone on 24 August, the company took a victory lap; now that appears to be slightly below the norm. The tech behemoth’s other platforms are expanding, as well: founder and chief executive Mark Zuckerberg said Instagram has topped 400 million monthly active users, and that WhatsApp has passed the 900 million mark “and continues to be on a path to reach a billion users and beyond”.
The mobile ad world is growing by leaps and bounds – so quickly, in fact, that analytics firm eMarketer predicts that Facebook’s global market share will actually shrink from 38.4% to 33.7% even as its revenues increase dramatically.
Facebook attributed 78% of its $4.29bn advertising revenue to mobile. All revenue across the business amounted to $3.2bn during the third quarter of 2014; this quarter, mobile ads alone accounted for $3.35bn. Mobile monthly active users alone were 1.39 billion.
Facebook is also about to expand its news business into a new app called Notify, which will stand alone from Facebook and allow users to subscribe to and personalize mobile notifications from participating publications. The app could launch as early as this week, according to the Financial Times.
3 India home to most confident consumers (Khaleej Times) Consumers in India - now the fastest-growing big economy - are the world's most confident, according to Nielsen. Surging personal wealth is pushing an unprecedented number of Indians to tour the globe. Indians are also taking on more credit, helping to bolster spending power as the festival season approaches.
Higher consumption in a retail sector that accounts for about half the economy will help Prime Minister Narendra Modi get companies to invest more and create jobs for a burgeoning population. Spending could rise further following four interest rate cuts and a scheduled pay hike for state employees.
The continuing challenge of a global economic slowdown means it will take time to use up India's manufacturing slack - about 1.5 years until capacity utilisation reaches around 85 per cent, from 71.5 per cent now. Price competition means it may take time for consumption gains to be reflected on corporate balance sheets.
Cheaper fuel amid a global commodity slump and sliding inflation has left more cash in the hands of consumers. As average household incomes triple to $18,448 over the decade through 2020, India's retail sales will double from current levels to $1 trillion, the Boston Consulting Group estimated in a February report.
The number of rich Indians rose a world-beating 26 per cent in 2014, according to a report from Cap Gemini and RBC Wealth Management. They also borrow a lot - second only compared with their peers in the Netherlands - and among their baubles are homes in gated communities they can buy only if invited to.
It's too early to reach a conclusion on whether the consumption surge will be sustainable, said Rupa Rege Nitsure, chief economist at L&T Financial Services. Credit going toward durable consumer products such as TVs and smartphones remain far from their peak levels, she said. Loan-growth numbers also are flattered by lower levels from last year.