Daily Update: April 26, 2023

Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy.

Diminishing the Digital Divide with Broadband Expansion and 5G Acceleration

Bridging the digital divide — the gap between those with access to technology and those without — has become a key priority for many countries as narrowing the gap can improve socioeconomic outcomes. Studies have shown that enhanced broadband access can lead to improved digital literacy and proficiency, better health, more employment opportunities, higher-paying jobs and other benefits that can drive economic growth.

The shift to the digital world accelerated during the pandemic as government shutdowns and social distancing to curb the spread of COVID-19 pushed people online. The virus magnified the importance of digital access and led to virtual work, remote education, telehealth, online banking, and other essential activities and services. Recognizing this, governments and businesses around the world have placed greater emphasis on expanding access through increased investments in digital technologies.

In the US, more federal dollars are set aside to expand broadband access to unserved and underserved communities. Supplementing existing programs, the Bipartisan Infrastructure Law allocated $42.5 billion for broadband infrastructure development. New broadband networks funded by the law are required to offer internet speeds of at least 100 Mbps for downloads and 20 Mbps for uploads. According to the latest research from S&P Global Ratings, an estimated 25.3 million Americans are unserved or underserved by the 100/20 Mbps broadband infrastructure. The law also allots $14.2 billion to longer-term broadband cost subsidies to help 13.6 million digitally disconnected urban Americans. "In the 21st century, high-speed internet is a necessity, not a luxury," Vice President Kamala Harris said at a 2022 Affordable Connectivity Program event.

As the digital transformation advances worldwide, more next-generation technologies are being deployed, including 5G. 5G is a wireless technology standard designed to offer download speeds of 1 Gbps and near-zero latency, which is the amount of time between data departing a source and arriving at its destination. The technology debuted globally in 2019 and promises to facilitate a new era of the internet of things, where connectivity between multiple devices in homes and across cities is possible at all times, according to an S&P Global Market Intelligence report.

5G adoption is gradually picking up globally, driven in part by the need for increasingly connected homes. At least 238 mobile operators serving 94 markets across the world had rolled out commercial 5G services as of the end of 2022, the latest 5G Tracker of S&P Global Market Intelligence's Kagan media research group showed. Africa took the spotlight in 2022 and launched nine commercial 5G deployments in the second half, thanks to strong government support. As most operators in developed countries had already launched commercial 5G in previous years, Kagan expects rollouts in the coming months to emerge from developing markets in Africa, Asia-Pacific, Eastern Europe and Latin America. Mainland China remains the world’s largest 5G market.

Developed countries are also leading the way when it comes to stand-alone 5G networks. Four major operators in the US and three in mainland China had launched stand-alone 5G as of the end of 2022. Although progress has been made, barriers to global 5G adoption remain, including implementation cost and complexity, particularly for stand-alone deployments.

While efforts to close access gaps have expanded, more work is needed to realize the full potential of 5G and related technologies to bring high-speed, reliable and cost-effective digital connectivity to all users and unlock socioeconomic advantages.

Today is Wednesday, April 26, 2023, and here is today’s essential intelligence.

Written by Pam Rosacia.

Economy

The Global Economy Shows Resilience In The Face Of Tightening Financial Conditions

Despite persistent inflation and tightening financial conditions, the global economic expansion will continue at a moderate pace. Near-term growth is dominated by service sectors that are enjoying renewed post-pandemic demand. Economic performance will vary widely across regions, with growth in Europe and the Americas experiencing subpar growth and emerging markets of Asia-Pacific and parts of Africa achieving robust growth.

—Read the article from S&P Global Market Intelligence

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Capital Markets

This Week In Credit: Prospects Dim For Rating Performance

Although the ongoing erosion of credit conditions slowed in first-quarter 2023 compared with the previous quarter, according to S&P Global Ratings’ latest Rating Performance Insights published on Friday, rising downside risks suggest more downgrades and defaults may come. The number of negative outlook revisions and CreditWatch placements rose by an eye-catching 56% in the first quarter, with operating performance pressures being the top reasons for potential downgrades.

—Read the report from S&P Global Ratings

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Global Trade

Asian Met Coal Could Ease In Q2 On Higher Supply, Mixed Chinese Demand Outlook

Asian metallurgical coal prices are expected to soften in the second quarter as supply disruptions in Australia are set to ease on warmer weather, while China's demand outlook is mixed amid uncertain steel requirements and the country resuming Australian coal imports after a near two-and-a-half-year pause.

—Read the article from S&P Global Commodity Insights

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Sustainability

US Hydrogen Developers On Tenterhooks Over Tax Code Definition Of 'Green'

Developers eager to aid the Biden administration in building a clean hydrogen economy are getting antsy as they wait for the US Treasury Department to clarify a small but potentially pivotal piece of tax guidance. The Inflation Reduction Act (IRA) of 2022 authorized tax credits of up to $3 per kilogram of clean hydrogen produced, depending on the carbon footprint of the production process, which could make the fossil fuel alternative competitive for the first time in the US.

—Read the article from S&P Global Market Intelligence

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Energy & Commodities

Scarborough: A Refresher For Australia's Major Gas Development Still On Track For 2026

It's been nearly 18 months since Woodside's high profile Scarborough gas project took Final Investment Decision (FID) back in November 2021, a milestone which had been delayed due to COVID-19. Since FID, and the impacts of COVID progressively waning, it has all gone a little quiet on the project whilst the region has its attention occupied by other high-profile developments.

—Read the article from S&P Global Commodity Insights

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Technology & Media

Android TV, Fire TV Grew Streaming OS Market Share With New Strategies In 2022

Kagan estimates the combined global installed base for smart TVs and streaming media devices, or SMDs, grew 7.5% year over year as of the end of 2022, but the market has slowed considerably since the pandemic began. Particularly, the net additions to the SMD installed base in 2022 were less than half that of 2020. The connected TV universe faced multiple challenges in 2022, including macroeconomic headwinds tied to inflation, fading demand related to the pandemic and increasing market saturation. Many vendors used the downdraft as an opportunity to pivot.

—Read the article from S&P Global Market Intelligence

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