The global tech market is facing a period of slower growth as trade and political factors around the world begin to push down tech spending.
Following a “stronger than expected” 2017 and the first half of 2018, analyst firm Forrester has predicted that the effects of global trade frictions, political uncertainties such as Brexit and erratic oil prices will hamper the UK and other key markets.
Although the US looks set to ride out the storm, economic weaknesses in Europe, China and emerging markets will result in tech market growth slowing to 4.5% in 2019 - down from 5% in 2018 - before declining further to 3.8% in 2020.
“The positive forces behind increased tech spending will persist; these forces include rising adoption of cloud, new analytical technologies like artificial intelligence, the need for firms to invest in business technologies to help them win, serve and retain customers, and a revival of spending on back-office technologies,” the report added. “But weaker economic growth, slowing revenue, and squeezed profits will offset these positives.”
Despite this slowdown, the US’ market dominance is predicted to rise, with its global market share increasing from 42% to 43% in 2019 and 2020. The country will also see the fastest growth rates, with 6.3% in 2019 and a predicted 5.6% in 2020.
Elsewhere, however, Forrester said the multitude of political and economic risks are a cause for concern for other nations.
The ongoing trade war between the US and China poses the threat of further tariff increases, while in Europe, French and German economies are slowing, Italy is facing a fresh debt crisis and the prospect of a “hard” Brexit is likely to further impact its own and neighbouring nations’ economies.
Japan’s economy also remains “sluggish”, while nations such as Russia, Turkey, Brazil and Saudi Arabia all face the real prospect of recession.
The report added that the investment and hype surrounding technology innovations such as artificial intelligence (AI) and blockchain will not be enough to make a difference to the global tech market outlook, predicting that businesses will offer them as functions in existing software products with little-to-no price increases.
Instead, cloud migration and transformation will help “prop up” overall tech market growth rates, thanks to the widespread adoption of software-as-a-service (SaaS) applications helping to drive up cloud spending.
