01/27/2012 10:37 EST | Updated 03/28/2012 05:12 EDT

Online Economy Expected To Double By 2016


The size and value of the business conducted online is forecast to almost double by 2016, says a report from a major consultancy.

Boston Consulting Group's report, released Friday from the Davos, Switzerland, financial summit on Friday, says the online economy of G20 nations is expected to grow to be worth $4.2 trillion US by 2016. That's almost double the $2.3 trillion US it was worth in 2010.

It's also almost three times the value of Canada's economy, at a little over $1.5 trillion US in 2010.

"Every business needs to go digital," said BCG's senior partner, David Dean.

The value of business conducted online is growing in lockstep with the growth in the number of internet users. The number of people with internet access around the world was 1.9 billion in 2010, but that's expected to grow to 3 billion in 2016 — about 45 per cent of all the people in the world at that point.

China alone is expected to have 800 million people online by 2016, about the same number as France, Germany, India, Japan, the U.K., and the U.S. combined.

"The ‘new’ internet is no longer largely Western, accessed from your PC. It is now global, ubiquitous and participatory," Dean said.

Even when transactions don't happen online, the internet is padding sales at traditional businesses in the real world, the report found.

Goods totalling 1.3 trillion were researched online before being purchased offline — representing 2.7 per cent of GDP among G20 nations, or more than $3,000 per household.

In addition to a larger pool of consumers, the wider adoption of smartphones and social media is increasing the amount of money changing hands online, the report found.

Indeed, mobile devices are expected to make up 80 per cent of all broadband connections in the developed world by 2016.

"Understanding the economic potential of the web should be an urgent priority for leaders," Google Inc. chief financial officer Patrick Pichette said of the report. "[There's] a powerful case for countries and companies to get online and reap the rewards of an age of data."