The negative impact of the ongoing Coronavirus pandemic is resulting in a far-reaching market decline spanning the APAC, US, and Europe.
With COVID-19 being declared a pandemic by WHO and national emergencies around, the world is witnessing a severe deterioration in the global economy. Referring to the Coronavirus outbreak, Forrester Research has recently updated its tech market projection downward. It has confirmed that concerning the current situation, the latest forecast shows the US and global tech market growth rate sinking to around 2% in 2020.
Andrew Bartels, VP, Principal Analyst at Forrester in the company blog post, “The Odds Of A Tech Market Decline In 2020 Have Just Gone Up To 50%” mentioned – “That assumes the US and other major economies have declined in the first half of 2020, but manage to recover in the second half…There is also a 50 percent probability that US and global tech markets will decline by 2% or more in 2020 if a full-fledged recession hits.”
It is still unclear to the world on how far and fast the COVID-19 pandemic will spread globally. The computer and communications equipment spending will be at the weakest – by potential declines of nearly 5% to 10%. Similarly, the systems integration services and tech consulting spending will slow down temporarily and could touch up to 5% – provided companies cut back on the new tech projects.
Forrester also reported that the software spending growth rate is expected to see a decline of 2% to 4% range. And in the worst case of a recession, it would have no growth. However, the tech outsourcing and telecom services companies could hold up better, but the risk is there as well – the contract revisions may lead to spending to fall.
Bartels also mentioned, “The only positive notes would be continued growth in demand for cloud infrastructure services and potential increases in spending on specialized software, communications equipment, and telecom services for remote work and education as firms encourage workers to work from home and schools move to online courses.”
As per Andrew Bartels, nobody knows what for the situation will be, post Q1 and Q2 of 2020. The US is spending around $8.3 billion in funds to help fight the Coronavirus outbreak. With all of these together, there is almost a 50% probability of the US recession – with no less than two-quarters of GDP decline in 2020. And the same story is all over the world. Though China is recovering its economy, Europe and other Asian countries are at higher risks of recessions.