Digital economy will represent over half of Latin America's GDP by 2022

This year marks a return to investment in innovation in the region by organizations in the region, says research.
Written by Angelica Mari, Contributing Writer

2019 will see a return to investment in innovation in the region by Latin American organizations, with the digital economy representing more than 50 percent of the region's GDP in the next three years.

According to research by analyst house IDC,  economic and political instability in Latin America, coupled with presidential elections hampered technology in the region last year, particularly in Brazil, Mexico and Colombia, which collectively represent 66 percent of the region's GDP.

But this is all set to change in 2019, according to the analyst firm, as the region will join the global move towards digital transformation, with an accelerated pace in innovation and spending on digital assets.

According to IDC Latin America, IT spending in Latin America between 2019 and 2022 should reach $380 billion. Some 54 percent of the companies polled by the firm said they will increase IT spending, and only 17 percent plan to spend less than in 2018.

In 2019, what the analyst defines as "third platform" technologies - so mobility, cloud, big data and social media -  will represent approximately half of Latin organizations' budgets and grow by 5 percent on average.

Within the next three years, almost 70 percent of all IT spending in Latin America will go towards these four technologies, as more than 75 percent of companies polled in the region will seek to create "digital native" IT environments in order to thrive in the digital economy.

More than 20 percent of cloud implementations in Latin America will involve edge computing, while 15 percent of front-end devices and applications will run artificial intelligence algorithms, the IDC report said.

By 2020, 60 percent of all new applications in Latin America will feature microservice architectures as organizations will seek to improve the ability to design, debug, upgrade and take advantage of third-party code, while 25 percent of all production applications will be cloud-native.

By 2022, the four top cloud platforms will have 70 percent of infrastructure-as-a-service or platform-as-a-service implementations in Latin America, and by 2024, 80 percent of the 1,000 largest companies in Latin America will have reduced the risk of contractual hijacking through technology and multi-cloud and hybrid tools.

Further ahead, IDC's forecast for IT spend over the next four years in Latin America also include a predicted increase in artificial intelligence-enabled user interfaces and process automation, which will replace a quarter of today's screen-based applications.

As industries and the global economy move increasingly towards the digital world, the number one priority of Latin American CXOs must be to prepare their organizations to reinvent themselves, the report says.

"As business confidence in technology increases, CXOs must carefully evaluate their IT providers, selecting those who are also reinventing themselves into the economy," it adds.

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