Japanese IT spending heads for double dip with restoration spend

Despite overcoming the negative impact of the global financial crisis and being on-track for another year on the up, Japan’s IT market really isn’t out of the woods.

According to IDC the country could be heading for a “double dip” later on this year as a result of the central government, local government, and corporations making their recovery efforts a priority. The required spend here will mean that many will “postpone non-essential IT spending”, which of course will hit the market hard.

Economic stagnation could be well on the way, says IDC, hurting corporate and consumer confidence. In turn it is having a knock-on affect in spending and IT purchasing to the extent of IT spending freezes.

As TechEye has pointed, the crisis in the wake of the earthquake has also disrupted supply chains all over. Although every effort is being made to restore production levels, there supply shortages of certain components and materials will continue, impacting on electronics such as smartphone.

This has led IDC to predict that Japan’s IT market is being constrained, not only by declining demand but also by limited components supply. Now IDC predicts that Japan’s IT market revenue will project a negative 4.5 percent year-over-year growth.

It gets worse, with all of Japan’s IT market segments – IT services, packaged software, and hardware – expected to experience negative figures compared to 2010.

However, Japan’s overall economy will improve next year as a result of restoration demand and overseas demand from the US and emerging markets.

It is thought that this could have an overall knock on effect on the IT spending market, which could see a year-over-year growth of 3.5 percent as it bounces back from the 2011 decline.

A key to the recovery, according to IDC, will be to resolve the power supply issues in eastern Japan in the mid- to long-term.

Smart meters, smart grid networks, HEMS (Home Energy Management System) and the like are being promoted as ways to resolve some of these problems.