US economic downturn dampens Asia-Pacific IT market outlook

Uncertainty about the U.S. economic situation has heightened concerns over the potential impact on the stability of Asia-Pacific's (including Japan) IT market, according to IDC.

Based on the latest economic indicators and existing IT forecasts, IDC expects the region's IT market growth rate to fall by 1.7 percent and 0.9 percent for 2008 and 2009 respectively, should U.S. economic conditions deteriorate. In monetary terms, the region's IT market potential is forecast to drop by US$4.8 billion and US$7.5 billion in 2008 and 2009 respectively.

Counters to downturn

"Economies with greater participation in fulfilling U.S. consumption will feel the brunt of a continued downturn more than others in the region," says Gary Koch, associate vice president of IDC's Asia-Pacific IT Spending Research. "However, industrial production growth and favorable levels of business investment and public sector spending in several parts of the region will soften this downward pressure on IT spending".

IDC also projects a second more negative scenario, where the gloomy U.S. economic situation would more significantly dampen business outlook on Asia-Pacific economies. Under this scenario, IDC's existing Asia-Pacific IT market potential forecast for 2008 and 2009 would be slashed by US$7.9 billion and US$13.6 billion respectively.

In particular, IDC expects the second scenario to push already very moderate growth rates of IT markets in South Korea and Taiwan into the negative for 2008.

While IDC projects a significant decline in absolute monetary terms of China's and India's IT market potential, the enormity of these markets is seen to cushion the resulting impact on their growth rates. Consequently, IDC expects the Asia-Pacific IT market to show moderate growth of 3.1 percent and 5.5 percent in 2008 and 2009 respectively.

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