Asian IT spending to rebound

Despite the financial turmoil currently plaguing the Asia-Pacific region, information technology (IT) spending there will soon rebound, according to a new study.

While IT spending will decline by 3 percent in 1998, the compound annual growth rate for the years 1998-2002 will reach 16 percent, International Data Corporation predicts.

"Although the market will experience a downturn this year, the long-term outlook is still very positive," said IDC senior vice president Philippe de Marcillac in a prepared statement.

"Today's crisis will create a stronger, more stable Asian IT market. The demographics remain well-poised for strong growth and the spending patterns in Asian markets dictate their preference for the latest and greatest technology whenever possible," he added.

Long-term forecasts aside, IDC had to adjust its preliminary 1998 spending forecasts in reaction to currency devaluations among ASEAN nations and Korea. As a result, IDC now sees both markets to report negative figures, sharply contrasting with expectations for 1997.

IDC expects Australia and New Zealand to remain stable. Strong growth is also foreseen in China and India, touted as oases amidst the region's spending drought. IDC continues to predict market growth and spending in these Asian giants will carry the region during its economic slowdown.

But the possibility of the crisis spreading into these countries carries ominous consequences. "If the currency crisis were to spread to China and Hong Kong, then the entire outlook would be altered, most assuredly for the worse," warned IDC analyst Lisa Cosmas.

Nevertheless, IDC maintains its faith in the region despite the region's currency dips and economic woes. "Vendors should continue to invest in the region, but must tailor their plans to the new market realities. Now is the time to review strategies regarding mergers or acquisitions in Asia," Cosmas added.