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What Can We Expect in 2012?
Monday, January 30, 2012 | Dr. Jennie S. Hwang, H-Technologies Group

Editor's Note: This article originally appeared in the January 2012 issue of SMT Magazine.

Once again the time to look at the year ahead has arrived. In this month’s column, I will take a long view on market thrusts and technological trends in selected areas deemed critical and relevant to the industry. Each of these areas will be briefly reviewed, but more detailed discussions can be found in future publications and speeches. After a protracted recession--or lack of a speedy recovery--how bleak is the global economic outlook for 2012? Is there a light at the end of the tunnel? How will the global economy affect business?

Global Economic Outlook

A crisis-riddled Europe, a weak U.S. recovery and lack of a clear governmental strategy in Washington D.C., in both deficit and debt reduction, pose the most economic concern and uncertainty for 2012. General consensus points to a U.S. GDP of 2.3 to 2.9% while the Organization for Economic Cooperation and Development (OECD) forecasts the U.S. economy to grow merely 1.8% and the euro-zone to expand by only 0.3%. The U.S. unemployment rate is projected to stay high, above 8%. The housing market remains sluggish, so far largely impervious to various economic “stimuli” instrumented by the Federal Reserve, although a bottoming-out is likely in 2012. Additionally, the upcoming U.S. presidential election adds another variable.

Although not without challenges, Asia continues to be the high-growth region--the world’s economic engine. China is still sitting on a $2.7 trillion foreign exchange reserve. The evolving balancing act in the country’s export and domestic consumption with manageable inflation is shaping up. While China is labouring to expand domestic spending to balance the export-centric economy, the weak economies in both Europe and the U.S. are hurting China’s exports.

A slowdown in China would have profound consequences worldwide, from commodity prices to U.S. export to financial backing to Europe. However, I do expect that China will monitor its economic dynamics very closely and take the necessary measures to keep its economic engine humming, all while mitigating the risk of any unwanted level of inflation. Easing the monetary policy by reducing bank reserve requirements has already begun and more is expected in the future. Nonetheless, growth in China in 2012 is expected to reach more than 7.5%.

Multi-national corporations continue to perform well, enjoying strong balance sheets. These corporations collectively hold more than $1 trillion in cash, which makes them poised for investing in growth when the time is right.

Overall, indicators point to a not-so-strong economy in 2012. Under this low-growth economic environment, the wise practice is to operate efficiently, be fiscally conservative and keep the powder dry.


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