Japan’s slow-growth tech market is Asia’s biggest — but not for long. Japan is expected to spend US$248 billion and on tech goods and services in 2017, which is the largest among all Asia Pacific countries. Measured in yen, growth will be low: 1% in 2017 and 0.4% in 2018.
China’s tech market will continue to shift from hardware to software and services. Forrester projects that China’s tech market spending will grow at 7% in yuan renminbi in 2017 (3% in US dollars). Hardware markets will continue to mature; state-owned enterprises will continue to replace foreign products with local alternatives; and cloud adoption will reduce the need for capital expenditures.
India’s tech spending will maintain the highest growth rate in Asia Pacific. India’s total tech purchases will increase by 8% in 2017 and by 10% in 2018 in rupees (5% and 8%, respectively, in US dollars). A robust economy, combined with government-led initiatives like Digital India and Make in India, will spur increased investment in the software, services, and outsourcing segments.
Forrester has just published our fall forecast update for the US tech market ("2017 US Tech Budgets: The Outlook For Tech Spending Overall And By Industry"), and we are now projecting 5.1% growth for business and government spending on tech goods, services, and staff in 2017. That's a modest improvement from the 4.4% growth we are forecasting for 2016. That 2017 forecast assumes a continuation of the economic policies now in place under the Obama administration and the Republican Congress, and thus a Hilary Clinton election along with Republican control of at least the House of Representatives. Should Donald Trump win the election or alternatively the Democrats take control of both the House and the Senate, our forecast for the US tech market in 2017 would be quite different.
The three main forces driving this forecast are the moderate pace of real economic growth at around 2%, the strong demand for the Business Technologies (BT) that help firms win, serve, and retain customers, and the transition to cloud.
As soon as the news of the Brexit vote in the UK came out, the Forrester team began revising our UK and European tech market forecast to take into account the economic implications and uncertainties of the voters’decision that the UK should leave the EU. Based on this revised analysis, we predict the UK tech market will grow by just 1% (pounds sterling) in 2016 with zero growth in 2017, compared with our prior forecast of 5% in both years.
Europe as a whole, will post no growth in 2016 (euros), and just 1% growth in 2017 — two percentage points slower than our earlier forecast. With the plummeting pound and enervated euro, European tech market measured in US dollars will be similarly weak with 0.2% growth in 2016 and 1.1% in 2017.
The slowing of UK and European tech market growth results from multiple uncertainties created by the Brexit vote coming on top of what was already a weak and shaky European economy. As a result:
The UK economy, which had been outperforming most of the Eurozone countries, will take a hit. The Belgian, Dutch, French, German, Italian, and Swiss economies, which are growing by 1-1/2% or less, are vulnerable to declines, with Italy especially exposed due to a looming banking crisis.
Greece and Portugal are struggling once again, with threats of renewed recessions leading to declines in tech spending.
The only countries with decent economic growth and above average tech market growth are Ireland and Spain in the Eurozone, and Sweden, Poland, and other Central European countries outside it.