Siemens 2007 Annual Report Download - page 113

Management’s discussion and analysis 113
Management’s discussion and analysis
In contrast, GDP growth is expected to rise to 5.7% in Asia-Pacifi c, from 5.5% in
2006, with China and India continuing as the primary growth engines. China is
expected to expand GDP by 11.5% in 2007, benefi ting from booming infrastructure
investment, strong export industries, and signifi cantly increased participation
in Chinese equity markets by domestic households with globally high rates of
income savings. India is expected to post GDP growth rate of 8.8% in 2007, down
from 9.4% in 2006, as the country develops its manufacturing and construction
industries and broadens its service sector to complement its established strength
in IT outsourcing.
GDP growth for the region comprising Africa, the Near and Middle East and the
Commonwealth of Independent States (C.I.S.) is anticipated to reach 6.6% in 2007,
above last year’s growth rate of 6.3%, as the countries of the region continue to
benefi t from strong global demand for oil and raw materials.
Market Development
The market for electronics and electrical engineering solutions and infrastructure
remained strong in 2007, with particular interest in advanced technologies that
could provide cleaner and more effi cient energy, increase manufacturing produc-
tion effi ciency, improve diagnostic and preventive healthcare and enhance trans-
portation.
Siemens’ portfolio focus positioned it well to meet customer demands in all
these areas. Strong demand for infrastructure investments, e.g. by the world’s
emerging and developing economies and oil-producing nations expanded the
opportunities for Siemens’ Groups in power generation, power transmission and
distribution, and transportation. Rapid industrialization continued in Asia-
Pacifi c, driven by China’s and India’s economic expansion. This in turn fueled
demand for Siemens’ offerings in factory and process automation and electronics
assembly. In developed nations, trends such as aging populations, healthcare and
homeland security concerns and rising energy costs played to Siemens’ estab-
lished strengths in medical diagnostics and building security, as well as to new
capabilities in alternative energy.
Market Trends
Within the broad macroeconomic trends discussed above, there are numerous
technological, geographic and customer demand trends that affect our business.
Important trends that we are monitoring closely for risks and opportunities are
discussed in the paragraphs that follow.
Demand continued to rise for factory and process automation as well as infra-
structure engineering solutions, particularly in Asia-Pacifi c countries that are
expanding manufacturing capacity to meet the demands of their outsourcing cus-
tomers in other regions. In the U.S. and Europe, demand for automation and con-
trol solutions was strong in sectors focused on exports. In the building market,
customers continued to seek technology enabling more secure, energy-effi cient
structures. In all regions, there is a growing trend toward reduced use of raw
materials and more energy-effi cient production processes.