Wednesday, August 5

Technology markets face rocky road this year — IDC

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KUCHING: The International Data Corporation (IDC) observed that with economic uncertainty and volatility impacting business and consumer confidence, technology markets are in for a rocky ride over the next 18 months.

According to its latest Worldwide Black Book, IDC pointed out that the forecast for this year is partly driven by economic cycles, including Brexit and the gradual recovery in emerging markets.

“Brexit is impacting business confidence and visibility, and will inevitably have some effect on IT projects during the next two to three years as the UK begins the precarious process of negotiating its exit from the European Union,” it said.

It also pointed out that the rest of Europe remains similarly fragile, and weak consumer spending would drag on growth in many European countries during this extended period of uncertainty.

Nevertheless, IDC noted that the quarterly review of information and communications technology (ICT) spending in 89 countries showed that ICT spending overall would increase by three per cent this year in constant currency terms to US$3.5 trillion, a slight improvement on last year’s two per cent growth rate.

This was mainly due to improvements in emerging markets and a general pickup in infrastructure spending. IT spending (excluding telecommunications) would also grow by three per cent this year.

“Last year’s slow pace represented a significant slowdown from the five to six per cent IT spending growth recorded from 2012 to 2015, and resulted from a slowdown in enterprise capital spending, weak consumer upgrades of PCs, phones, and tablets, and ongoing sluggishness in IT services,” it added.

Aside from that, it noted that IT spending growth in China is expected to slow to five per cent this year from nine per cent in 2016, and would decelerate further in the next two to three years as the economy goes through a period of transition and restructuring.

“The BRIC countries are no longer a homogenous grouping in terms of technology trends and market opportunities,” said Stephen Minton, programme vice president in IDC’ Customer Insights & Analysis group.

“In China, infrastructure spending remains extremely strong, driven largely by government investments, but consumer spending has slowed. In Brazil and Russia, recovery will be gradual, in line with the overall economic cycle.

“India, meanwhile, will bounce back from a weak finish to 2016, when demonetization had a negative effect on tech spending in the fourth quarter, with a return to double-digit growth in 2017,” he added.

On a more positive note, IDC highlighted that emerging markets recovery could drive the next wave of IT spending opportunities.

“The next wave of IT spending opportunities increasingly lie beyond the Brazil, Russia, India, and China (BRICs), in emerging markets across Africa, the Middle East, Eastern Europe and Latin America.

“The IDC Worldwide Black Book now covers ICT spending in 89 countries, and the latest forecasts show strong growth projected for the year ahead in countries such as Ghana, Namibia, Pakistan, Ecuador, and Ukraine. Key markets such as Nigeria, Morocco, and Iraq will also show improving trends,” it said.