DespiteHeadwindsICTAccording to the latest release of IDC, Worldwide ICT Spending Guide Enterprise and SMB by Industry, spending is expected to grow by over 3.8% in 2022, reaching $1.4 Trillion by 2026 with a compound annual growth rate (CAGR) of 5.2% by the end of 2026.

Consumer technology spending in Asia/Pacific is hit, with growth slowing in 1H2022. However, enterprise technology spending, including service providers, remained strong. The ongoing supply chain constraints, geopolitical tensions, rising inflation, weakening of local currencies against the US dollar, and a resurgence of infections in pockets continue to impede economic recovery post-COVID-19. Tightening monetary policy to manage rising inflation in the region is driving an increased risk of economic slowdown and poses solid headwinds for ICT spending growth in the next 18 months.

"ICT Spending in the region has moved from exuberant growth last year to that of strategic growth," says Vinay Gupta, Research Director, IT Spending Guides, IDC Asia/Pacific. "Technology budgets are stable as of now. However, leaders will place greater scrutiny on technology investments as they represent a much larger share of spend and also to allow them sustainable business growth," he adds.

Asia/Pacific is home to a mixed bag of countries. Singapore, South Korea, India, Thailand and Taiwan are, e.g., net importers of energy and commodities and are facing the brunt of increased imported inflation due to the weakening of the local currency. Whereas Indonesia and Australia, which export commodities such as coal, oil, and gas, have benefited from the current situation. Their inflation results from the increasing demand due to the opening of the economy and supply chain constraints. With China as their largest trading partner, many Asia/Pacific countries were hit due to lockdowns in China. IDC assumes that the Chinese economy will stabilize and return to growth in 2023. The industries in these countries are therefore impacted in different ways.

Overall, few industries are expected to have a slight slowdown in 2022 ICT spending, mainly owing to the global challenges, and expected to grow wearier throughout 2022 until government measures fall into place to keep the economy stable.

The above chart shows the difference in 2022 technology spending growth between the January and July releases of Worldwide ICT Spending Guide Enterprise and SMB by Industry.

Consumer-driven sectors such as personal and consumer services, wholesale, construction, and retail have slowed down due to rising inflation or lockdowns to control infection spread, depending upon the geography in question. Industries with lesser dependence on consumer discretionary spending or which provide essential services are showing stable technology investment. These include banking, insurance, telecommunication, securities, investment, and professional services.

"As economic uncertainties slowly set into the region, government initiatives in each country continue to fight back by complementing macroeconomic stabilization measures," says Mario Allen Clement, Associate Research Manager, IT Spending Guides, IDC Asia/Pacific. "Enterprises may continue to focus on operational efficiency. However, new initiatives may be stalled," he added.

Education is expected to grow slower in 2023 as IT investments may be stalled due to excess and sudden spending in 2021, followed through in 2022. Wholesale is expected to have a higher bounce back as budgets focus on improving omnichannel selling, growing commerce ecosystems, expanding into global markets, inventory transparency, and automation.

Sustainability continues to be a key focus as trends shift across the region. Major large businesses have already started to focus on resiliency amidst uncertain outlooks and have focused on re-allocating budgets. Subsequently, SMB segments look towards governments across the region to help stabilize the economy as concerns over the supply chain and employee well-being emerge.

The Worldwide ICT Spending Guide Enterprise and SMB by Industry is IDC's flagship all-in-one data product capturing IT spending across more than 100 technology categories and 53 countries. This IDC Spending Guide will provide a granular view of the market for IT spending from a country, industry, company size, and technology perspective. (Source: IDC)

By MediaBUZZ