Regional market bounces back

15 February 2002

The Middle East and Africa (MEA) IT market is expected to make a rapid recovery from the downturn in 2001 and is forecast to grow by more than 12 per cent this year, according to the US research and consultancy firm IDC.

Iran and the Maghreb countries are among the key growth markets in the coming years, says IDC. In North Africa, the continuing liberalisation of the telecoms sector is poised to lead to increased IT spending, and in Iran growing interest in the internet and an easing of restrictions are expected to fuel demand for IT products.

IDC revised downwards its growth projections for 2001 in the wake of the 11 September attacks on the US. It warned that IT spending would suffer from the consequent negative impact on regional economies, from the collapse in tourism and the wider global economic slump. The company added that revenue growth had already been slowing in the first half of 2001, in part because of increased political instability in the Middle East. Lower oil prices are also expected to reduce IT funding in the Gulf, as governments face constraints on spending.

The revised forecasts for 2001 indicate a contraction of 6.4 per cent in market value, which totalled $15,800 million in 2000. Before 11 September, IDC had projected minimal growth of 0.3 per cent. The figure marked a dramatic drop from the 20 per cent growth the region's IT sector recorded in 2000.

Sales of IT hardware, which in 2001 made up 58 per cent of total MEA IT spending, will slow, while demand for software and services will continue to rise, IDC forecasts. In the third quarter of 2001 alone, personal computer (PC) sales in the region shrank by more than 13 per cent. The decline was prompted by financial and political problems in key markets such as Turkey and Israel, where consumer confidence and spending was hit. In the Gulf, the pace of PC growth is expected to slacken off as global firms reduce their IT outlay. Nevertheless, limited PC penetration across the region means demand is growing from a low base and an overall expansion is likely in the coming years.

Catherine Richards

IDC's Europe, Middle East and Africa IT Perspectives is updated quarterly and is available for purchase from or

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