Saturday, October 29, 2011

Economy: Think Global

Last week we learned that the U.S. accelerated its economic expansion in the Q3, which might have disappointed some pessimists. The GDP (a gauge for the national income) grew 2,5%, thanks to growing consumer expenditures and rising capital spending (investments) from the companies. And there was a third growth engine: Exports jumped 4% (plus 3,6% in Q3).

It looks like America is benefitting more & more from the growth of the global economy, especially in Asia & Latin America. The Chinese economy is expanding with a pace of around 9% and the Chinese need therefore more machines & consumer goods from the U.S. and from Europa. Other countries like India, Russia, Brazil and Turkey also show high economic growth rates and more appetite for imported goods & services. Shipments to foreign countries, especially to emerging markets, are helping a lot of U.S. and European companies override the weakness in their home markets.

“The global economy is growing, and the American companies that can tap into that broader economy can still post satisfactory results,” said Adolfo Laurenti, deputy chief economist at Mesirow Financial Inc., according to Bloomberg.

Take for instance Caterpillar, the world’s largest construction and mining-equipment maker. They reported that last quarter their profit jumped 44% compared to last year, and that revenues soared 41% and reached a new record. Bloomberg wrote that the numbers were boosted by advancing sales in China & Latin America.

Likewise, last week, Rory Read, the CEO of the semiconductor maker Advanced Micro Devices,  presented better-than-expected quarterly profits and a positive fourth-quarter outlook. "We saw double digit revenue and unit shipment growth in emerging markets like China and India", he explained.

Other companies like General Electric (power generators and more), DuPont (chemicals), Boeing, Honeywell (aerospace & chemicals) and McDonald´s also reported strong Q3-numbers and solid growth. These multinational corporations are benfitting from growth in their oversea markets, especially in Asia. Even European companies like Volkswagen show strong growth rates in spite of the weak European economies, thanks to the growth in the emerging markets in Asia & Latin America.

But Apple might be the largest beneficiary of the global growth. The Wall Street Journal Blog "All Things Digital" ( ) reported that Apple`s sales in the Asia Pacific region are rising to $14.3 billion during 2011. That’s an increase of 174%. To further visualize the change, realize that in 2010 the Asia Pacific segment represented just 13 percent of Apple’s total net sales and increased to 21% in 2011.

Apple CEO Tim Cook said recently, that the company’s prospects in China are very strong right now. “In my lifetime I’ve never seen a country with as many people rising into the middle class aspiring to buy products that Apple makes”.

Think global.

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