January 25, 2013
The Asia Pacific (AP) growth engine did not fire on all cylinders in 2012, leading Forrester to revise its IT purchases growth forecasts for the year. While Australia, South Korea, and several ASEAN tech markets are showing continued solid growth, in other markets like China, India, Japan, Malaysia, and Vietnam, political leaders are struggling in the face of growing economic problems. My colleague Andy Bartels and I, with the help of Forrester’s AP analyst team, have recently published our revised IT purchase growth forecasts for 2013. Here are our key expectations by country:
- 2012’s slowdown in China will be short-lived. Despite a slowdown in 2012, China continues to attract intense vendor interest because of its size and potential for further growth. The expected government stimulus efforts in the country will offset factors such as weak demand from businesses and governments. The slowdown in 2012 (+9%) is therefore likely to be short-lived, with stronger growth resuming in 2013 (+10%).
- India’s IT growth will remain slower than expected through 2014. 2012 (+7%) was a relatively lackluster year for the tech market in India. Worse than expected economic growth, combined with political gridlock on economic reforms, kept the tech market from reaching its full potential in 2012. While we expect the public sector to drive India’s IT spending growth, the impact will be limited through 2014 due to the parliamentary elections scheduled for that year.
- In Japan, the end of the recovery will give way to a sluggish tech market. The combination of the euro debt crisis, the US economic slowdown, and Chinese demonstrations triggered by territorial disputes over Pacific islands all combined to negatively affect Japan’s economic recovery in 2012. While the recent stimulus package should help boost the Japanese economy, Forrester expects IT purchases to remain flat in 2013 in part due to fizzling ICT equipment sales.
- In Australia, growth in financial services spending will offset a slowing natural resources sector. In 2013, the growth of IT purchases in Australia will continue at a similar pace to 2012. 2012 saw a shift in drivers, though, with the oil and gas and natural resources sectors scaling back some of their investment plans and financial services growing faster than expected. The financial services sector will continue to drive growth in 2013 as companies transform themselves to better adapt to changing business and economic environments.
- ASEAN countries will be resilient to slowing global growth, but political risks remain. Most ASEAN countries were resilient to the faltering economic growth in Western markets in 2012. Forrester expects that most ASEAN countries will continue on a solid growth path in 2013. However, political risks exist that could weaken the private sector’s confidence and negatively affect IT spending.
Despite mixed results in 2012, vendor strategists should expect continued growth in AP in 2013, well above the levels expected in Western markets. Closely monitor the political landscape as a key indicator of likely economic performance — and IT spending growth — over the next 12 months.