Japan IT market Reported To Be On A Course Towards a Double Dip in 2011

Should your Toronto business be concerned about the earthquake in Japan and the impact on technology?  Some experts are concerned that business may not be able to get the parts and equipment needed to maintain and replace technology?  Your Toronto IT support team at Dynamix is keeping a close eye on what is happening in Japan.

The IT market in Japan had good reason to be optimistic heading into 2011 as it was forecasted to experience positive growth and appeared to have overcome the less than favorable impact of the global financial crisis. Now however, things don’t look so rosy for IT. It appears that the IT market may be slated for a double dip. Recently published was the new International Data Corporation (IDC) forecast indicating that the central government, local governments, and corporations may adjust their priorities in the wake of the Great East Japan Earthquake and resulting tsunami in March, 2011.

Unfortunately, corporate and consumer confidence is slipping, which is causing them to slow their purchases and consumption and even going to the extent of putting IT expenditure on hold for the time being. To make matters worse, the Japan earthquake and tsunami has also interrupted supply chains in many industries.

To their credit, every effort is being taken to restore production levels; however, the supplies of certain components and materials just aren’t available. Converged mobile devices (such as smartphones) is a likely target for the impact.

According to EE Times Europe, “Accordingly, IDC now forecasts Japan’s IT market to reach 12.0165 trillion yen in 2011, with negative 4.5% year-over-year growth. All of Japan’s IT market segments – IT services, packaged software, and hardware – are expected to experience negative when compared to 2010. The new forecast represents a substantial decline from 12.5879 trillion yen and year-over-year growth of 2.9% in 2010. Japan’s 2011 IT market was previously forecast (in February 2011) to be 12.6172 trillion yen with 0.6% year-over-year growth.”

There’s hope on the horizon though as IDC is presently optimistic about the forecast for 2012 suggesting that Japan’s economy might improve in 2012 due to demand for restoration, as well as overseas demand from the U.S. and emerging markets. In the same report it was quoted as saying, “overall IT spending will increase with the economic rebound and is forecast to reach 12.4327 trillion yen in 2012, enjoying a year-over-year growth of 3.5% as it bounces back from the 2011 decline.”

The Disaster of 2011 in Japan has truly tested the resolve of the Japanese people. The fact that there is optimism for an IT market rebound so early is a remarkable feat in itself.

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