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APAC manufacturing sector to cut back

IDC reduces its forecast for IT spending growth in the Asia-Pacific region as manufacturers tighten their belts due to economic downturn.
Written by Victoria Ho, Contributor

The manufacturing sector in the Asia-Pacific region is tightening its belt, and this is expected to deal a blow to the region's IT spending as well, says IDC.

The analyst company released a statement Wednesday saying the total IT spending in the manufacturing sector in the Asia-Pacific region (excluding Japan) is likely to grow slower than initially forecast.

IDC predicts manufacturing IT spend in the region to hit US$23.4 billion this year. While this represents a year-on-year growth of 2.9 percent, it falls short of the 7.9 percent it predicted in May last year.

In the longer term, this figure is set to reach US$31.2 billion in 2012, representing an 8.2 percent compound annual growth rate (CAGR) from 2008 to 2012. This again, however, marks a 5.5 percent drop compared to IDC's May forecast of US$33 billion.

In particular, spending by the automotive and high-tech electronics sectors "will be the hardest hit", growing by only 1.9 percent and 1.6 percent respectively this year.

The report notes that China will experience a harder hit compared to India, but is also expected to bounce back faster by 2012.

IDC said: "The short-term outlook for the region's manufacturing sector indicates that manufacturers are tightening their belts in terms of IT spending, particularly in hardware investments.

"[They] will try to leverage existing assets...moving from 'nice-to-have' to 'need-to-have'."

IDC said: "Manufacturers need to think long-term and be strategic about cost-cutting measures in order to survive this economic crisis.

"Effective use of IT can in fact help reduce costs, and improve agility and decision-making capability. This creates a platform for the existing workforce to be more productive."

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