US and india are bright spots in global economic outlook
It's a tough world out there. Recently, the World Bank cut its outlook for global growth, saying the global economy is being pulled by the US economy and "this does not make for a rosy outlook for the world. It is really not enough." The Eurozone, the second largest industrial laser market, seems to have averted a third recession since the financial crisis. Germany, home to two of the largest industrial laser companies and a dozen other significant international suppliers of laser products, is the fourth largest economy in the world and the largest within the Eurozone—the International Monetary Fund (IMF) projects 1.2-percent growth for 2015, down from 1.5 percent in 2014. The German industrial laser economy is heavily export-oriented, especially to China.
Growth in the emerging markets (BRIC)—a target of industrial laser equipment suppliers—is slowing more than expected. China, the world's second-largest economy and largest industrial laser market with a growth rate at 7.1 percent for 2014, is down from its forecast of 7.5 percent and is expected to reduce its 2015 growth rate target to around 7 percent, which will cause reverberations at European laser suppliers. Russia, a hoped-for growth market for industrial lasers, is heading toward deep recession with the economy contracting by 2.9 percent this year due to tumbling crude oil prices and Western sanctions. Brazil's Planning Ministry reduced its growth forecast (GDP) for the country's economy in 2015 from 2 percent to 0.8 percent. Conversely, India is expected to lead the South Asian economic growth to a four-year high of 5.4 percent in 2015. The Indian economic growth rate is expected to be 5.9 percent in 2015—a good sign for lasers—and many, like Bloomberg BusinessWeek, expect that manufacturing activity there may be the next "China."
Japan, arguably the third-largest laser market and home to several of the largest laser cutting system manufacturers, has been flirting with recession again. The IMF assumes government policy responses will support a rebound and strengthen growth in 2015. The industrial laser market can use strong contributions from this sector.
Countering this glum economic news is the US, where the IMF upgraded its forecast for the world's largest economy to 3.6-percent growth in 2015. They say cheap oil, more moderate fiscal tightening, and still-loose monetary policy will offset the effects of a gradual increase in interest rates and the curb on exports from a stronger dollar. However, manufacturing exports may be under pressure in the world markets as above, and demand for US goods—lasers included—may tighten. Some experts have raised questions about the strong US reliance on export growth. Joining the US as a "bright spot" in the global outlook is India, where the government is moving ahead with economic overhauls, leading to increased activity in the automobile industry—a choice target for industrial laser system suppliers.
ILS, in consideration of the forecasted global situation, reduced the projected 2015 total industrial laser market growth rate to 5 percent from the 2014-estimated 6 percent. This is still a very healthy $2.8 billion, which translates into a potential $12-billion laser systems market.
David A. Belforte
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