Monday, 19 March 2012

Canada’s digital economy lags behind G-20 peers

Canada’s digital economy lags behind G-20 peers

Mar 19, 2012 – 7:20 AM ET | Last Updated: Mar 19, 2012 11:35 AM ET
Canadians are among the most active social networkers in the world, but they would still rather do their shopping offline in the comfort of a bricks-and-mortar location, according to a new research report that places Canada’s Internet economy in the middle of the pack among its Group of 20 peers.
Canada’s total “Internet Economy” accounted for 3% of the country’s total gross domestic product (GDP) in 2010, with that number expected to climb to 3.6% by 2016, says the survey, released Monday, by The Boston Consulting Group (BCG) and commissioned by Google Inc.

Still, that would put Canada below the average of its G20 contemporaries, which saw the Internet economy account for an average of 4.1% of GDP in 2010, climbing to 5.3% in 2016.
While the 2016 numbers rank Canada below the developed-market average of 5.5%, it places the country in the same ballpark as Germany (4%), France (3.4%) and Australia (3.7%).
However, four years from now Canada is still expected to trail world leaders the United Kingdom (12.4%), South Korea (8%) and China (6.9%) by a wide margin. The United States’ Internet economy is projected to account for about 5.4% of GDP in 2016.
“On pretty much every dimension of the Internet economy, Canada is either average or slightly below average,” Tawfik Hammoud, partner and managing director of the Boston-based consulting group, said in an interview.
“It does show the potential that exists if we can find ways to unleash it … there are a few distinctions, but I wouldn’t say Canada is fundamentally different from the rest of the Western World,” Mr. Hammoud said.
Including government spending, investment and consumption metrics, Canada’s Internet economy totalled about $49-billion in 2010, and is expected to reach $76-billion by 2016, the report says.
Still, there are some areas in which Canada still trails the rest of the world by a considerable margin. Online retail in Canada, for example, accounted for just $18-billion, or 3.4% of the country’s total retail spending in 2010. Although those numbers are expected to climb to $34-billion and 5.3% by 2016, Canada will still rank well below the developed market average of 8.5% and the G20 average of 6%.
Shoppers in the U.K. are the most voracious in the world, with 23% of the country’s retail spending coming from online by 2016, according to the report, well ahead of other European countries such as Germany (11.7%) and other Western powers such as the U.S. (7.1%).
Although many Canadians have a habit of researching products online, many still opt to drive to retail outlets themselves to make the purchase.
“There are areas where Canada is doing quite well and there are other areas where we can see space for improvement, and it’s the sort of improvement that will drive economic growth over the next five to 10 years, that can be quite significant,” Google executive Colin McKay said in an interview. Globally, BCG’s research shows that by 2016, about three billion people — nearly half the world’s population — will be Internet users. As the Internet population swells, the Internet economy in the G20 countries is expected to reach US$4.2-trillion in 2016, up from US$2.3-trillion in 2010.
While the number of Internet users in developing nations (800 million) already outnumbers those in G20 countries, social-networking sites reach about 80% of users around the world in both developed and developing nations.

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