 "APAC Tech Mkt Slow; But India Inches Ahead In 2013")
Asia Pacific’s growth rate of 4.3 percent in 2013 in local currency terms is hampered by slowing growth in China and India but offset by improvements in Australia, Japan, and South Korea, according to Forrester Research’s latest global ICT spending forecast. The report projects a sharp drop in the value of the yen against the US dollar — a side effect or, perhaps, an intended main result of Abenomics — means that the Asia Pacific tech market will actually decline by 3.2 percent when measured in US dollars.
Forrester’s global ICT spending outlook (in dollars) expects a 2.3 percent growth in 2013, down from the 3.3 percent forecast in January, and stronger growth of 5.4 percent in 2014. The continued recession in Europe and slowing growth in China will offset improvements in the US, Japan, and some emerging markets. The strong US dollar is keeping US dollar growth rates two percentage points or so below those in local currencies.
In general, CIOs will focus their biggest spending increases on software, where growth globally will be 5.7 percent (in local currency terms) in 2013 and 7.3 percent in 2014. New technologies like SaaS apps, mobile devices and tablets, analytics and big data, and smart process apps are growing at double-digit rates – primarily in the Tech Twelve countries.
Forrester analyst Andrew Bartels said, “Asia Pacific CIOs will still grow their tech buying, but the rates will depend on their country.”
Country-specific findings from the Asia Pacific tech spending forecast include:
China remains stuck in third gear. We and other economists had expected that China’s new political leadership would take decisive steps to re-ignite growth after its sub-par growth of 7.8 percent in 2012. So far, though, the Chinese economy is showing the same signs of lagging consumer spending, deflating property values, and tapped-out capital investment, with real GDP projected to grow by 7.5 percent in 2013. “CIOs in China need to consider whether and how much to slow the breakneck pace of their tech buying in the face of tightening bank lending and other signs of a Chinese economy that can’t decide whether to grow at 9 percent or at 6 percent,” Bartels notes. China’s tech market growth will slow in 2013 to less than 7 percent. By 2014, China (and India) should start to improve, offsetting
slower growth in Japan, resulting in growth of 5.1 percent in local currencies and 3.7 percent in US dollars.
Tech spending growth will be faster in India. India’s growth of 5.8 percent in 2013 won’t be as weak as in 2012 but will still fall short of its 2010 and 2011 growth rates. “CIOs in India can start to get ready for a slightly higher pace of tech buying than was appropriate during India’s slowdown in 2011 and 2012,” Bartels notes. By 2014, India (and China) should start to improve, offsetting slower growth in Japan, resulting in growth of 5.1 percent in local currencies and 3.7 percent in US dollars.
Japan gets at least a temporary boost from “Abenomics.” To the surprise of many Japanese citizens and foreign observers, the Japanese government under Prime Minister Shintaro Abe has launched a policy of aggressive monetary easing and fiscal stimulus; this stemmed an incipient recession and produced a 3.5 percent growth rate in Q1 2013. While the Japanese stock market has since backed down from its highs and doubts about the strength and sustainability of the recovery are spreading, Japan’s projected 1.8 percent real GDP growth in 2013 will be markedly better than we and others had assumed at the start of the year. Bartel writes: “CIOs in Japan should be cautious until “Abenomics” proves it can lift Japan’s economy and they get signs that Japan’s political leaders will not abandon those efforts.”
Australia will ease back to a still healthy 2.5 percent; one to two percentage points faster than in 2012. Bartel wrote, “CIOs in Australia should also be watching how much they expand their tech budgets until it becomes clear that China — the biggest market for Australia’s natural resource exports — is on a solid growth path.”
In other Asia markets, South Korea will edge up to 3.2 percent; and the Association of Southeast Asian Nations (ASEAN) countries will experience solid expansions in the 5 percent to 6 percent range.