Asian nations including India and China are set to drive unprecedented levels of internet-related economic growth among G-20 countries in the next four years, although the UK will remain top dog, according to new research from the Boston Consulting Group.
The management consultancy took a look at how large a slice of GDP the internet is responsible for in the world’s 20 major economies, with online consumption and infrastructure investment the two main contributors to internet GDP.
It found that the so-called ‘internet economy’ will contribute 5.3 per cent or $4.2 trillion (£2.6tr) to the G-20’s total GDP in 2016. The UK topped the table in the percentage stakes, with its internet economy predicted to contribute an impressive 12.4 per cent to its total GDP in four years’ time.
“If it were a national economy, [the internet economy] would rank in the world’s top five, behind only the US, China, India, and Japan, and ahead of Germany,” said report co-author David Dean.
“Policymakers often cite GDP growth rates of around 10 per cent per year in the developing markets, but they look past similar, or even higher, rates close to home.”
One of the key regions driving what Dean described as “unfettered growth” is Asia, which accounts for four out of the top six countries. In order, these are: South Korea, China, India and Japan.
While South Korea and Japan are labelled as established “natives” in the report – with internet economies predicted to contribute 8 per cent and 5.6 per cent to their respective GDPs – China (6.9 per cent) and India (5.6 per cent) are “aspirants” at an earlier stage in their development.
India in fact is predicted to have the second highest compound annual growth rate (CAGR) for its internet economy at 23 per cent in the period 2010-2016, while China isn’t far behind in fifth place with 17.4 per cent CAGR.
Several “natives” on BCG’s e-Intensity Index – the UK, South Korea, and Japan – are among those nations with the largest internet contributions to GDP. China and India stand out for their enormous internet-related exports – China in goods, India in services – which propel their internet-economy rankings toward the top of the chart. Mexico and South Korea have also developed significant internet export sectors.
According to the Boston Consulting Group, internet GDP growth basically comes down to more users and broader access, with the increasing popularity of mobile devices and social media platforms fuelling both elements.
The report also highlighted the importance to retailers of multi-channel strategies.
It revealed that in virtually all G-20 countries more money was spent on ‘research online purchase offline’ (ROPO) than online-only, with smartphones in particular being used by consumers to compare products and deals whilst out and about shopping.
In 2010, for example, Japan ROPO sales numbered $139bn (£87.5bn) as opposed to $89bn (£56bn) spent online, driven by the fact that Japanese consumers still like the experience of shopping in-store.
In China, consumer-to-consumer e-commerce is incredibly popular, with more products purchased on the eBay-like site Taobao in 2010 than at the country’s top-five brick-and-mortar retailers combined. ®