SOURCE: Orbus Investor

December 06, 2006 12:12 ET

Africa and Asia Key to Global Economic Picture: Analyst

BALTIMORE, MD -- (MARKET WIRE) -- December 6, 2006 -- Two reports issued in recent weeks highlight the role that international markets play in moderating declining American economic growth.

In the Organization of Economic Cooperation and Development's new economic outlook, the forum for industrialized nations indicated that the world economy is facing a rebalancing of growth across OECD regions. This will lighten the impact of 2007 U.S. growth forecasts, which the OECD revised downward from 3.1% six months ago to 2.4% this week.

According to Sam Hopkins, editor of market analysis e-letter Orbus Investor, "As the U.S. lowers its soft landing gear and dials down expectations for GDP numbers, regions as diverse as Africa and Asia will combine to ensure a healthy trajectory for the overall global picture."

Primarily, increased activity in Europe and East Asia (excluding Japan) will pick up the slack for a slowdown in the U.S. German business confidence, for example, rallied to an unanticipated 15-year high in late November.

Another international authority, the World Bank, provides more validation of the economic weight shift now gaining steam. The Washington-based body expects East Asian economies to chalk up a fifth straight year of growth in 2007.

China is especially highlighted as a destination for East Asian exports as the U.S. and Japanese consumption slows.

"What China's consumption has also done is catapult it into the world's unfortunate elite of energy intensity," says Hopkins. "This means that for every percentage point of GDP increase that China racks up, its energy consumption increases by more than one percent."

Hopkins notes in his most recent Orbus Intel e-letter, "Africa has become a primary target for China's energy quest, with some of the world's last virgin oil and gas reserves within the continental borders in countries like Libya and Angola."

"Yet Africa is conspicuously absent from the World Bank and OECD's international economic recalibrations. It shouldn't be," stresses Hopkins.

"Africa is on the upswing, make no mistake about it. For one case in point, take a look at the continent's mobile phone penetration. A study issued last year by the Centre for Economic Policy Research, a European economic study consortium, showed that an increase of 10 mobile phones per 100 people led to a 0.6% increase in per capita GDP," says Hopkins.

According to the survey, 85% of small businesses in sub-Saharan Africa rely exclusively on mobile phones. "Cell phone market growth correlates directly to overall economic growth, especially as the continent was the first region in the world where mobile phone subscribers outnumbered fixed-line users," states Hopkins.

"For many of these African consumers and businesspeople, their portable phone is the first phone they've ever had. This is a situation other regions have never seen, and so the growth this circumstance entails will be a unique beast," says Hopkins. He recommends it be called the world's first "Lion Market."

Sam Hopkins is managing editor of Orbus Investor, an investment advisory service that focuses on wealth opportunities from a geopolitical perspective. Sam is a firm believer that as global interdependency becomes the norm, businesses and their capital can no longer cling to national borders. Having recently returned from Latvia and Estonia, Sam frequently travels to developing countries to investigate international investing opportunities. Speaking seven languages, Sam has extensive knowledge and experience in international relations.

Hopkins has written a research report titled "Buy Globally, Trade Locally." To obtain a free copy, click here: http://www.orbusinvestor.com/subscribe/220

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