The sharp decline in world exports of ICT and Service Equipment
Preliminary data for Q3-2023 confirm the difficulties of the sector, although with different intensities at sector and geographic market level
Published by Marcello Antonioni. .
Slowdown Planning Conjuncture Check performance Industries Uncertainty Global economic trends
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Pre-estimates of world trade for the 3rd quarter of 2023, available in the ExportPlanning Information System, highlight, in a context of sharp slowdown in global sales of investment goods, the case of the ICT and Service Equipment1.
As shown in the graph below, world exports of this industry showed, for the fourth consecutive quarter, a year-over-year decline in the measurement at constant prices2.
The continuing reduction trend in global sales of this industry tends to likely reflect purchasing policies of more "normal" users, after that, during 2021 and in the first part of 2022, the product shortage had led distributors and users to increase precautionary stock levels.
The decline in global exports of this industry is having
a particularly pronounced intensity...
Indeed, over the last decade, there have been other negative economic phases for world sales of ICT and Service Equipment, such as, for example, the two-year period 2015-2016 (with 8 consecutive quarters of drops trends), but the overall intensity of these declines was lower than the current one.
Still with reference to the two-year period 2015-2016, for example, the amplitude from positive peak to negative peak was just over 7 percentage points on an annual basis, when measured at constant prices; in the negative cyclical phase of 2019-2020 (5 consecutive quarters of trend declines), the peak-to-peak amplitude was 5 percentage points on an annual basis.
In the current negative cyclical phase, however, the peak-to-peak decline has already touched, in just four quarters, 9 percentage points on a annual in the measurement at constant prices, testifying to a particularly intense joint cooling.
.. especially in the sectors computers and peripheral units and furniture and objects for the office, shop and school...
Driving and slowing sectors
The analysis of the trends in global exports of the ICT and Service Equipment industry highlights, moreover, a picture with different performances at a sectoral level.
World Exports of ICT and Service Equipment
(Year-over Year % changes at constant prices)
| 2022 | H1-'23 | Q3-'23 | YTD-2023 | |
| Computer and peripheral equipment | - 2.0 | -16.2 | -13.4 | -15.2 |
|---|---|---|---|---|
| Communication equipment | + 0.8 | - 0.7 | + 3.2 | + 0.7 |
| Furniture for office, school and shop | - 7.3 | -14.8 | -10.5 | -13.5 |
| Machinery and equipment for office and shop | +13.5 | - 2.2 | - 6.6 | - 3.7 |
| Burglar and fire alarm | + 5.2 | + 5.5 | + 2.0 | + 4.3 |
| TOTAL ICT and Service Equipment | - 0.3 | - 8.7 | - 5.6 | - 7.6 |
Source: ExportPlanning - Data - Quarterly Trade Data, World Trade Datamart
Slowing sectors
In the case, for example, of the computer and peripheral units3 sector, after a slightly negative 2022 , during 2023, world exports recorded double-digit declines, with a cumulative annual drop that has already exceeded 15 percentage points4.
Similarly, in the furniture and objects for office, shop and school sector5, after an already significant decline experienced in average 2022 (-7.3% at constant prices), during the first 9 months of 2023 world exports showed a cumulative decline of 13.5 percentage points. For this sector, the peak-to-peak decline on an annual basis (-14.4% at constant prices) is not matched, in terms of intensity, in other cyclical phases of the last decade.
Driving sectors
On the other hand, within the ICT and Service Equipment, the communications equipment6 sector is holding steady, which - after a moderately positive 2022 (+0.8% at constant prices) - during 2023 it initially experienced a moderate reduction in its exports at global level (-0.7% trend in the first half of the year) and, in the most recent quarter, the return to a "plus" sign (+3.2% trend in constant prices), with an overall balance of moderate increase (+0.7% in the period January-September 2023 compared to the corresponding period 2022).
Driving and slowing markets
In the first 9 months of 2023, the majority (59%) of international markets offered a negative contribution to the evolution of world exports of ICT and Service Equipment.
.. with the United States and numerous Asian markets falling...
Slowing markets
Above all, the case of the US market should be highlighted, which - as already documented in the recent article "The deterioration of US demand for investment goods in 3Q 2023" - experienced a sharp deterioration in demand for capital goods and, in particular, ICT and Service Equipment (-14.3% y-o-y at constant prices in the first 9 months of 2023).
We should also highlight the cases of world exports of ICT and Service Equipment to numerous Asian markets (Hong Hong, Japan, Taiwan, South Korea), all with double-digit declines when measured at constant prices.
In the European area, however, there were declines in world exports aimed mainly at the markets of Netherlands, Germany and Czech Republic.
Driving markets
In the admittedly minority group (approximately 41%) of markets with cumulative trend increases in sales from the world of ICT and Service Equipment, the case of China should be underlined, which offered the greatest positive contributions to the evolution of world exports of the industry in question (+260 million euros in current values, +477 million at constant prices).
.. in the face of positive performances of the markets of China, Slovakia, Saudi Arabia, Mexico, Turkey, above all.
Other driving markets of ICT and Service Equipment are, in order, those of Slovakia (+12 percent in measurement at constant prices), with a contribution very close to that of the Chinese market, Saudi Arabia (+13.9 percent), Mexico and Turkey (+11.8 percent).
Conclusions
Despite an overall negative context, the situation in global sales of the ICT and Service Equipment industry is highlighting very heterogeneous trends both at the product level, with sectors - such as, for example, that of equipment for communications (but also the smaller burglar alarm and fire prevention sector) in positive contrast, both above all at a geographical level, with a significant number (63) of markets growing in measurement at constant prices in the first 9 months of 2023.
The need for exporting companies
to optimize their foreign market portfolio
For exporting companies in this industry, which are facing a clear worsening of the economic situation, it now appears strategic to be able to identify the international markets with the greatest growth potential, on which to focus their marketing and commercial development for the last part of 2023 and especially for 2024.
Thanks to the new series of services Market Insights, ExportPlanning intends to support the market portfolio choices of exporting companies.
1) For a description of the sectors included therein, see the related industry profile.
2) The measure Quantities at constant prices (Q). This measure includes a deflation operation, in which the historical series of monetary values (V) has been transformed into an analogous series of values expressed at constant prices, with a reference to a given year, known as the base year. For a description of the methodology applied, please refer to Methodological Note on the World Trade Datamart.
3) For a description of the products included therein, see the relative sector profile.
4) For the computer and peripheral units sector, this is a drop comparable, in intensity, to that experienced in the two-year period 2015-2016, when - as in this case - the peak-to-peak drop of the sector's world exports had exceeded 15 percentage points on an annual basis at constant prices.
5) For a description of the products included therein, see the relative sector profile.
6) For a description of the products included therein, see the relative sector profile.
