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JRI news release
The Economic Pulling Power of Digital Consumer Electronics

Februaly 19, 2004

During the current economic recovery, the digital consumer electronics sector has seen rapid growth and hopes are rising that it will provide the pulling power for continued economic recovery.

In the short term, the potential of the demand for digital consumer electronics to boost consumer spending is likely to be limited, partly because digital consumer electronics account for only a small share of consumer electronics as a whole and partly because the rate of growth of demand for flat-screen TV sets, on which the greatest hopes of demand growth were riding, is thought likely to remain slow.

In the medium-to-long term, however, the growth of demand for digital consumer electronics is likely to make an important contribution to sustained growth of the Japanese economy, for the following three reasons:

(i) As seen in the fact that demand growth to date has centered on domestic demand and dependence on external demand is falling and the fact that, as typified by the trade surplus in television sets, the export competitiveness of products with higher added value is increasing, the foundations of the Japanese economy are growing stronger in such a way that it is becoming less vulnerable to external conditions.

(ii) The component intensiveness of digital consumer electronics means that demand for electronic devices is likely to grow rapidly, and as Japanese companies enjoy an advantage in electronic devices for digital consumer electronics, a substantial stimulus to production of the electronic devices can be expected.

(iii) The growth of demand for electronic devices will stimulate semiconductor-related capital investment.

Although the stagnation of demand for communications equipment and computers means that overall demand for electrical equipment are unlikely to recover, the above three factors suggest that economic recovery under the leadership of digital consumer electronics can be expected to continue for some time.

For more information on the content of this report, please contact
Hideki Matsumura
Economics Department, Economic Research Center, Domestic Economy Cluster
Tel: 03-3288-4524 E-Mail:matsumura.hideki@jri.co.jp

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