Siemens 2008 Annual Report Download - page 148

52 Management’s discussion and analysis
In the Americas region, GDP growth is expected to fall to 1.8% in 2008 from 2.7% in 2007, primarily because of
a decline in U.S. economic growth from 2.0% to 1.3%. This decline includes sharply reduced consumer spending
in an environment of rising unemployment, falling house prices, falling equity values and higher living costs.
Tighter credit due to the nancial crisis also restricted economic growth. While Latin America beneted from
higher raw materials prices, GDP growth in the region is still expected to slow to 4.0% from 5.3% in 2007 due in
part to weaker demand for the region’s exports in the U.S.
Siemens’ third region is Asia/Australia/Middle East. This region, which had GDP growth of 6.1% in 2007, is pro-
jected to grow 4.8% in 2008. Because of its strong dependence on exports, the region is exposed to downturns
in demand from importing countries. This was particularly evident in Japan, estimated to grow 0.4% in 2008
compared to 2.0% in 2007. While China is expected to again grow substantially faster than the region as a whole,
reduced export demand and appreciation of its currency are among the factors slowing GDP growth to an esti-
mated 9.8% in 2008 compared to 11.9% the year before. India is seen as posting growth of 6.5%, down from
9.0% in 2007 due in part to ination. Despite a rapid decline in oil prices in the latter half of 2008, leading to
planned cuts in production, the Middle East is anticipated to grow faster in 2008 than in 2007, with GDP expan-
sion rising to 6.9% from 5.5%.
The estimates and projections presented in this section are based upon a report dated November 14, 2008 pre-
pared by Global Insight, Inc. and have not been independently veried by Siemens. Due to effects on the world
economy resulting from the nancial market crisis, gures for 2008 might deviate signicantly.
Market trends
The most important market trends for Siemens are the four “megatrends” that cover the entire range of our
activities, both geographically and technologically. These are urbanization, demographic change, climate
change and globalization.
Urbanization refers to the growing number of large, densely populated cities around the world. This includes
both established metropolitan centers in industrialized nations and fast-rising urban centers in emerging econ-
omies. Urbanization is driven by a number of forces, including in-migration from rural areas and population
growth in urban areas. This megatrend is important to Siemens because we provide solutions for manufactur-
ing, urban transit, building construction, power distribution and hospitals, among others.
Demographic change includes a number of trends, with one of the most important being the increasing aver-
age age of the populations of many countries, particularly industrialized nations. This trend is important to
Siemens because we provide a wide range of solutions for preventative healthcare and early diagnosis of disease
– two essential requirements for living longer, healthier lives.