IT Spending Growth to Slow


IDC has forecast that overall IT spending growth will slow down from the 5%-6% seen between 2102 and 2015 to around 3%, bringing spending this year to $3.5 trillion. The IT industry will see a continued move to the cloud which is increasing driving capital spending.

The company expects discussions over Brexit to dampen growth in Europe, with IT spending growing just 1% in the UK this year. “Europe is a wild card in terms of downside risks,” said Stephen Minton, program VP in IDC’s Customer Insights & Analysis group. “Brexit carries a wide range of potential scenarios, and our current baseline forecasts don’t represent the worst case. There are also downside risks in relation to the U.S., Japan, and China, which could have a negative impact on business confidence, if only because they will lead to an increased sense of caution with regards to major new projects while government policy remains uncertain.”

s minton mIDC no longer sees the BRIC countries as a homogenous group as growth rates diverge. “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.”

China is expected to slow to 5% growth this year from 9% in 2016, and will decelerate further in the next 2-3 years as the economy goes through a period of transition and restructuring. Other key emerging markets, however, are expected to show improving growth in 2017, including Brazil and Russia where technology spending was severely affected by economic downturn last year. IT spending in Brazil will rebound from a 4% decline in 2016 to growth of 7% in 2017. Russia will post a decline for the overall market and this is mainly linked to weak sales of smartphones and PCs. Spending on enterprise infrastructure will rebound from a 5% decline last year to growth of 3% in 2017 before returning to double-digit growth in 2018, assuming the economic turnaround in Russia remains on track.

The next wave of IT spending opportunities increasingly lie beyond the 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.