Laser Outlook For 2016

There is some fair debate going on now as to whether our worldwide economy is on an upswing or a downswing. But does this really matter to the laser market?

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There is some fair debate going on now as to whether our worldwide economy is on an upswing or a downswing. In the US, the fed is preparing to raise interest rates for the first time since 2006, which is a positive sign, but the slowing in China is well documented, and Europe, with the possible exception of Germany, still really has never fully recovered from the last slowdown. Perhaps even worse is that emerging economies are slowing.

The IMF October forecast was for worldwide GDP growth to be 3.1% in 2015, slightly lower than the 3.4% growth for 2014, and lower than the 3.6% forecast growth for 2016. The IMF largely blames slowing worldwide growth in China, political instabilities, and weak commodity prices for much of this slowdown.

So has this sluggish worldwide growth slowed much of the demand for lasers? Surprisingly it hasn’t. While the economy certainly has some effect on some laser areas, in many others, the laser markets are broadly diversified and largely uncoupled from the underlying economy. At least this is true in enough areas to let the overall laser market float over any short-term economic uncertainties.

Here are some examples. In the medical laser market, the Cosmetic and Dermatology segment is the largest—it’s basically lasers that remove tattoos, soften wrinkles and other skin problems, and prevent hair growth. In 2015, to date, laser revenue has grown in this area over 16% on a yearly basis. Almost all laser use in this area is elective and therefore not covered by insurance, but slow economy or not, people continue to want to look good. In fact the slow economy, or maybe more precisely the need to get a job or a better job, might be fueling some of this growth. A slow economy can make the job market more competitive and because of that, people feel they need to make themselves more competitive.

Another laser segment growing in excess of worldwide GDP growth is communications. In communications, lasers are used for repeaters and communications transceivers, and several large communications companies control most of this demand. In this area, worldwide mobile data traffic alone is forecast to grow 68% in 2015 from 2014, and another 62% in 2016. If the economy has slowed mobile data growth, these growth figures certainly don’t show it and communications laser growth continues to grow as well.

But wait, some areas of laser growth must be slowing because of the economy? What about KW-class materials processing? Nope. While some areas are certainly slowing, China, the country consuming the most materials processing KW lasers continues to grow laser demand. Many of these lasers are being purchased by the Chinese government, which has hopes of enhancing its country’s advanced manufacturing capabilities, and takes a longer view, despite short-term economic fluctuations. Several companies this year saw their KW laser sales to China increase more than 10%. Overall demand for KW lasers, especially fiber lasers, is way up in 2015.

Overall, most laser segments of the market are performing well despite any underlying economic problems. Certainly laser areas do take an economic hit, but enough of them are isolated enough from the economy to keep the overall laser market buzzing along in both good times and in bad. At least we are keeping our fingers crossed on this one.

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