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IDC Cuts Global IT Growth Forecasts on Renewed Emerging Market Fears
Source: bnamericas.com
Source Date: Wednesday, February 05, 2014
Created: Feb 11, 2014

IDC has cut its worldwide IT market growth forecast for 2014 on the back of renewed fears regarding the performance of emerging markets.

 

The company had previously said that a rebound in IT spending in major emerging markets including China and Russia this year following a slowdown in 2013 would boost global IT spending to over 5%.

 

However, IDC now expects that figure to be closer to 4.6% in constant currency terms, after cutting its forecasts in Asia Pacific including China, Central and Eastern Europe, and the Middle East and Africa.

 

Latin America's growth forecast remains unchanged, but with expected growth of 8% for 2014, it is already significantly lower than the 14% seen last year.

 

The explosive growth of mobile devices in recent years has inevitably begun to cool, while currency devaluations and inflation are likely to inhibit business confidence in many emerging economies during the first half of this year, IDC said.

 

Exchange rate volatility is likely to exert a strong influence over global IT suppliers' revenues this year, and although it is too early to predict whether the dollar will remain strong throughout 2014 - it may create economic instability in key emerging markets, IDC said.

 

Latin American countries have so far been among the hardest hit by currency devaluations against the dollar in the first month of this year.

 

Meanwhile, some areas of IT spending are picking up in mature markets, with servers and storage each expected to grow by 3%, and the PC market showing tentative signs of stabilization.

 

Businesses in mature markets are beginning to feel more confident about the economy, and there is significant pent up demand in the US and Europe for infrastructure upgrades, capacity and bandwidth investments, as well as overdue replacement cycles.

 

However, despite this mature market improvement, cannibalization in both the hardware market - as users transition to mobile devices - and in software and services as the cloud model increases in popularity, will continue to inhibit IT growth in these regions, IDC said.

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