Asia feels effect of US slump

The knock-on effect is having a measurable impact on IT spending

Recurring news of further deterioration to the outlook of the US economy has raised concern over the potential impact on the stability of the IT Market in the Asia/Pacific region, including Japan (APJ). In a review of the most recent economic indicators, current IT forecasts, and the economic linkage of APJ and US economies, IDC developed two scenarios of worsening US economic outlook for lead factors associated with IT expenditure. In the first scenario, IDC's research depicted a moderate 1.7 per cent and 0.9 per cent erosion of its current forecast APJ IT market growth for 2008 and 2009, respectfully, should the US conditions worsen. In dollar terms, this means $US4.8 billion and $US7.5 billion less market potential in 2008 and 2009.

"Even with a slightly less optimistic outlook depicted in our preliminary IT market forecasts, a further slide in the US outlook will have noted impact on the APJ IT Markets", said Gary Koch, associate vice president of IDC's Asia/Pacific IT spending research.

IDC's research illustrates that a second more drastic negative scenario for the US economy would result in a stronger influence on the business outlook in the APJ economies and would result in as much as $US7.9 billion and $US13.6 billion slashed from IDC's current APJ IT market forecast in 2008 and 2009. This would push the already very moderate growth rates of IT markets in Korea and Taiwan into negative territory for 2008. While the decline in absolute dollars within IDC's projections are substantial in markets like China and India, the sheer size of these markets diminishes the resulting impact on their growth rates. Therefore, the APJ regional IT market will still boast moderate growth in both 2008 and 2009, 3.1 per cent and 5.5 per cent respectively.

Len Rust is publisher of The Rust Report.

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