Emerging Focus

Emerging Focus: Emerging Market Economies to Benefit from Robust Growth in Internet Usage and Access
Article | 11 Jul 2011
Internet usage and access are growing at an alarming pace in emerging market economies. This will benefit economic growth in these countries by contributing towards labour productivity, empowering consumers with knowledge and increasing the overall competitiveness of theeconomy. It will also have significant implications on businesses creating many opportunities.
Average Annual Growth in Internet Users in 25 Key Emerging Market Economies: 2011-2020
average annual % growth
Source: International Telecommunications Union/World Bank/Trade Sources/Euromonitor InternationalNote: (1) Emerging market economies cover 25 key economies which include Argentina, Brazil,Chile, China, Colombia, Egypt, Hungary, India, Indonesia, Kazakhstan, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Romania, Russia, Saudi Arabia, South Africa, Thailand, Turkey, the UAE, Ukraine, and Vietnam.
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Key points
* Internet access and usage in emerging market economies (EMEs) are expanding at a rapid pace owing to their large populations andrising disposable incomes. The number of Internet users in 25 key EMEs grew by 177% between 2005 and 2010 reaching 954 million compared to the 26.7% increase witnessed in advanced economies during the same period;
* By 2020, almost 60.0% of the world's Internet users will reside in 25 key EMEs, up from 48.6% in 2010. The number of Internet users in these countries is expected to grow by anannual average growth rate of 9.8% between 2011 and 2020, reaching 2.2 billion by the end of that period. Within EMEs, India is expected to see the fastest growth in Internet users between 2011 and 2020, rising by 22.1% per year;
* Despite rapid growth in Internet users, broadband penetration rates vary significantly amongst EMEs and remain low in many countries due to lack of infrastructuraldevelopment, particularly in rural areas. In 2010, Poland had the highest broadband penetration rate within EMEs with 60.8% of households owning a broadband Internet enabled computer, followed by Hungary (57.3%) and the UAE (45.6%). On the other hand, in Indonesia, only 1.6% of households had a broadband Internet enabled computer in the same year;
* Robust growth in Internet markets will benefitoverall economic growth, create business opportunities and influence consumer spending patterns by empowering consumers with knowledge and choice. The total market size of Internet retailing reached US$38.1 billion in 2010, up from US$8.4 billion 2005, with China alone accounting for over 30.0% of the market size;
* However, a 'digital divide' persists between advanced economies and EMEs,where the latter lag behind in terms of Internet usage and access. Information, communications and technology (ICT) infrastructure in many of these countries is still underdeveloped compared to advanced economies and may prove to be a challenge in the coming years.
Rapid growth in Internet markets
EMEs are amongst the biggest Internet markets in the world owing to their large populations and risingdisposable incomes.
* In 2010, the total number of Internet users in 25 key EMEs reached 954 million, significantly higher than the 784 million users in advanced economies. EMEs witnessed a period growth of 177% between 2005 and 2010 in the number of Internet users, compared the 26.7% period growth in advanced economies, owing to an increasing number of broadband subscribers;
* China wasthe world's biggest Internet market in 2010 with 419 million Internet users while Brazil and India ranked fourth and fifth globally with 84.1 million and 74.9 million Internet users, respectively. However, China's broadband penetration rate at 26.5% of households in 2010 compared to an average of 65.7% of households in advanced economies because broadband is not yet available in many rural...