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Widespread growth likely in global ICT sector

OECD report predicts heady times ahead

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Heady days of 20 and 30 per cent growth in the 1990s remains unlikely, but the worldwide ICT sector is expected to grow a vigorous six per cent in 2006, according to a new report.

The Organisation for Economic Co-operation and Development's biennial Information Technology Outlook report predicts the highest growth areas will be in internet-related investments, Linux servers, digital storage, personal digital assistants, and new portable consumer products.

Furthermore, the OECD expects that market growth will be more of a truly global phenomenon over the coming year, as opposed to 2004 when it was a surge in the United States' ICT industry that led the world's high-tech sector out of a slump following the dot-com boom.

With the emergence of new growth economies - in particular China - ICT spending was up 5.6 per cent per year from 2000 to 2005 in US dollar terms.

In the 30 countries making up the OECD including Ireland, ICT spending was up 4.2 per cent during the same period although market share dropped from 89 per cent in 2000 to 86 per cent in 2006. ICT spending is therefore increasing rapidly in non-OECD countries. China's ICT sector has experienced 22 per cent growth since 2000, and its spending in 2005 is estimated to be around the $118bn mark.

Across the 30 OECD countries 14.5 million people - roughly one in 80 - work in the ICT sector and although the top technology firms' revenues are now 20 per cent more than in 2000, their employment levels have remained flat.

In terms of international trade and services, increasing commodity prices and cheaper consumer equipment means the performance of ICT trade has been somewhat disguised. However, at 13.2 per cent the share of ICT goods in total trade is the same percentage as in 1996. Ireland is by far the leading exporter of ICT services and software goods in the OECD, with combined exports of over $20bn in 2004.

In terms of foreign direct investment (FDI) the outlook is good for 2006, although the nature of investment flow has changed with manufacturing countries like China, India and Eastern European states joining countries such as Ireland and Korea as major ICT exporters.

Mergers and acquisitions have driven foreign investment, and the value of cross-border deals in the ICT sector has increased 47 per cent. Indeed, ICT firms comprised 20 per cent of all mergers and acquisitions and although the medium-term outlook is good, there is concern that global interest rate rises could adversely affect company balance sheets.

The OECD is made up of Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Republic of Korea, Japan, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Spain, Sweden, Switzerland, Turkey, Britain, and the United States.

Copyright © 2006, ENN

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