U.K. advertising firm says BRIC economies have not pulled back on spending in first five months of 2012.
The economic uncertainty swirling around the global economy has had only a mild effect on advertising spending in China, Russia, India, or Brazil, Sir Martin Sorrell, founder and chief executive of British advertising giant WPP Group, said in an interview with DJ FX Trader and The Wall Street Journal on Tuesday.
“We see no significant change in the fast-growth markets in 2012, but it’s a lower overall growth rate,” said Sir Martin, who is in Washington, D.C., to attend The Wall Street Journal’s CFO Network conference.
The fiscal crisis enveloping the euro zone, paired with reports that growth is slowing in emerging markets, has investors worried, contributing to concerns that business profits are at risk. But advertisers in the so-called BRIC countries haven’t pulled back on spending in the first five months of 2012, Sir Martin said.
“It hasn’t affected consumption in those economies,” he said.
He sees this year progressing much like last year, although at a slightly slower pace. “Two-thousand-twelve is the same pattern as 2011 but less,” he said, citing previously-released expectations that WPP will increase its revenues by 4% this year, down from just over 5% last year.
China’s current five-year plan, he noted, is aimed at boosting domestic consumption, increasing the healthcare and social security safety net, and growing the service sector.
Based on conversations he’s had with Chinese entrepreneurs, Sir Martin said, he expects China’s economy to grow between 7.5% and 8% this year, which is what the country needs to “keep social harmony.” Rather than an abrupt “hard landing” for the Chinese economy, he sees a “soft or no landing,” he said.
Brazil and Russia are also both strong, although India is “the one economy where we’re seeing slowing of the growth rate” among the BRIC countries, he said.
Sir Martin said that WPP is increasing its revenues in BRIC countries at roughly double the countries’ own growth rates.
“Local categories are growing very quickly,” he said.
WPP’s worries at the moment include the euro zone crisis, a Syrian civil war or Iranian-Israeli war in the Middle East, and the U.S. deficit, he said. He also thinks Western Europe will remain in a “depressed