Growth in the European IT and telecomms market will fall below eight per cent next year, but the IT side promises healthy performance.
Despite the impending recession in parts of western Europe, sales of IT equipment are expected to grow faster in 1999 than this year, with expansion rates greater than the rest of the world. But the figure is held back by telecomms, whose growth will contract by a full percentage point between 1998 and 1999.
According to the influential European IT Observatory, overall growth next year will be 7.9 per cent, making total revenues of Ecu 416 billion. This compares with growth of 8.3 per cent this year and with an increase of 9.6 per cent in the US in 1999, down from 9.9 per cent this year.
The forecast comes in the six-monthly update of the EITO's annual survey, which is supported by the Eurobit association of IT hardware and system suppliers and the Ectel association of telecomms kit suppliers.
"Western Europe is showing a clear recovery by international comparisons. The EITO findings reveal that, for the first time in more than 10 years, the European IT market is again developing faster than the world market as a whole," the EITO said. The European IT sector is forecast to grow 9.5 per cent to Ecu209 billion in 1999, an increase on a 9.3 per cent rise this year. This outperforms the global growth rate of just under nine per cent next year. But the total is brought down by telecomms, which will see its 7.3 per cent growth this year fall to 6.3 per cent in 1999.
"The setbacks in south east Asia and Japanese will reduce worldwide growth this year and in the coming year below the nine per cent level. Japan would show a reduction of about one percentage point in 1998, but should be able to recover again in 1999 to a plus of 4.4 per cent," the EITO report says.
Growth in the US market will drop next year. "The US market, with plus 9.9 per cent in 1998 and plus 9.6 per cent in 1999, is performing only marginally better than the market in western Europe," the EITO said - and it will do worse than Europe in IT.
The highest IT growth rates are for professional services, up 15 per cent, while software should grow by 13.5 per cent in 1999, after 12.4 this year.
Classical hardware will rise six per cent, an improvement on five per cent this year, with NT server sales the driving force, up an estimated 35 per cent next year, after a stunning 45 per cent in 1998.
In telecomms, public infrastucture investment is expected to rise 8.7 per cent in 1999, with the heaviest spending coming in France, Italy and Spain.
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