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US propels global technology market to $2 TREEELION in 2013

Forrester says Asian buying will slow, but overall spend on upwards trend

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The US will be the primary driver of global growth in the technology market in 2013 and 2014, with Asia Pacific spend contracting thanks to a slowdown in India and China and a strong US dollar, according to analyst house Forrester.

The firm’s latest report A Mixed Outlook for the Global Tech Market In 2013 and 2014, claims that global growth will be 2.3 per cent to reach $2.1 trillion this year before climbing up to 5.6 per cent in 2014.

US CIOs should expect spending to grow 5.9 per cent this year and 6.9 per cent next, while in APAC there’ll be a decline of 3.2 per cent (when measured in US$) in 2013 before a rebound to 3.7 per cent growth in 2014.

APAC has in recent years been something of a global technology growth engine, but the cracks have started to show in the past 18 months, with Gartner's Q2 2013 PC shipment predictions pointing to a disappointing year-on-year decline of 11.5 per cent.

Some of the blame for APAC’s poor 2013 performance is laid at the feet of the two huge markets of India and China. The former’s predicted growth rate of 5.8 per cent will fall short of 2010/11 levels, Forrester said, while the PRC will drop to 7.4 per cent by 2014:

The report had the following less than enthusiastic take on happenings in the Middle Kingdom:

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 per cent 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 per cent in 2013.

The report pointed out that exchange rates have played a big part in its forecasts, however, with APAC actually predicted to grow 4.3 per cent when calculated in local currencies, but tipped into negative growth when measure in US dollars.

The US$ is particularly strong against a Japanese yen being deliberately devalued by Abenomics, meaning CIOs in the Land of the Rising Sun should be especially cautious until longer term effects can be seen, Forrester advised.

As for Australian CIOs, the Aussie dollar will be relatively flat against the Greenback with growth dropping a percentage point in 2013 to a “still healthy” 2.5 per cent and then up slightly to 2.8 per cent the following year.

The report had the following advice:

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. CIOs in China face a different question – 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 per cent or at 6 per cent.

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