Forecasts for the Polish IT market: PLN 34bn and continued growth in 2016More information on this topic is presented in the PMR report:
The Polish IT market will continue to expand in the period 2016-2021. This year its value will increase by over 4% to arrive at PLN 34bn. The positive situation is first of all an effect of solid macroeconomic forecasts.
The year 2015 in the Polish IT sector was definitely characterised by stability. The performance in each of the three key market segments was positive and the result for the entire market was in line with our previous expectations. This year's survey by PMR saw more than doubling in the share of respondents pointing to investment reductions in the public and local government segment as a barrier to the development of the IT market. The public sector remains a strategic area from the suppliers' viewpoint, for at least some of them being of paramount importance. Our interviews with the biggest IT companies suggest that the prolonged period of uncertainty following the political changes in the country, delays in tenders related to IT infrastructure in the public administration as well as the pause before new funds are released from the pool for 2014-2020 for the development of innovativeness in administration hamper business growth, while also, first of all, becoming a risk factor that may have an adverse impact on the suppliers' financial standing and performance if that situation continues. This is especially true for large players since the public sector not infrequently generates a substantial portion of their revenue.
Compared to last year our forecasts did not change principally, although we do take into account the new budget perspective and the continued solid macroeconomic foundations of the Polish economy which makes it possible to revise the forecasts up in the medium and long term. We assume that until 2020 the growth rate of the Polish economy should remain at a level of at least 3% per year in real terms, falling under that threshold only in 2021. It should be added here that last year our short-term GDP forecast for 2015 proved 100% accurate (we expected 3.6%). The representatives of the executive staff of the biggest IT companies in Poland, interviewed by PMR in the second quarter of this year, are similarly optimistic in their expectations. For both 2016 and 2017 the median expected growth for the whole market is 5%, with the respondents presenting on average slightly better forecasts for 2017.
As regards the three key segments of the IT market, the relatively poorest forecasts at the moment are those for the hardware market, although the situation of the domestic suppliers is clearly better than global or even regional prospects. In the period covered by our projections apart from the lower volume of computer and monitor sales on the Polish market we also expect decline on the print market, although our forecasts have flattened off following last year's market recovery and are no longer as conservative as at that time. Domestic distributors will still be seeking to diversify their portfolios through the sales of consumer electronics, toys, furniture or other articles not necessarily related to the IT sector, with some players even planning to distribute foodstuffs.
It should be borne in mind that in the first two quarters of this year the sales of IT hardware globally fell to levels recorded last time almost 10 years ago. On the global mass market the centre of gravity has shifted more towards smartphones. That segment already displays the symptoms of saturation, but in the first half of 2016 the market was able to generate single-digit growth. The decline on the global hardware market is first of all a consequence of the economic trouble faced by Latin America and Russia. The contraction of markets in terms of value is driven by the decrease in the value of local currencies in relation to the dollar. According to PMR's latest data, in 2015 in Russia a total of about 11 million computers were sold (including tablets), which represented a 38% drop compared to 2014. Laptop sales plunged by as much as 44%, to 3 million devices, with that figure being recorded last time in 2007. The first half of 2016 witnessed a rebound of several percent, but given the above sales levels it is difficult to consider it to be a sign of improved demand.
For the Polish market we also tried to take account the expected impact of Brexit, which is reflected first of all in our macroeconomic premises exerting an indirect influence also on the IT sector. In our opinion it is too early to make a realistic assessment of Brexit's impact just on the Polish IT market, especially as the very process of leaving and negotiating with the EU will take many years and at the moment there are more doubts surrounding it than concrete answers.
Business climate index in the IT sector in Poland
In the second quarter of 2016 PMR conducted a survey of the biggest Polish enterprises active in the IT sector. That survey was carried out already for the thirteenth time. It covered 112 top companies operating in the IT sector.
The primary objective of the survey was to collect information making it possible to evaluate and describe the present situation on the Polish IT market. Additionally, an attempt was made to estimate the future condition of the IT market and the growth prospects for the next two years were evaluated, taking into account development directions. Traditionally, we also sought to identify the barriers hampering the growth of the sector and the drivers of that growth.
- Based on answers to seven questions concerning the situation in the IT sector and the financial standing of the respondent's company, PMR calculates the business climate index in the IT sector in Poland. For years this tool has been reflecting all the changes that have occurred in this sector over the last 12 months.
- The value of the index estimated for the latest survey is 31.05 points, representing a relatively good condition of the Polish IT sector. However, it needs to be pointed out that in the previous survey the index was almost 8 points higher.
- Drops were recorded for six of seven components making up the business climate index. The biggest changes were noted in relation to the sector forecast for the next 12 months and the assessment of the present situation in the IT sector.
More information on this topic is presented in the PMR report:
IT market in Poland 2016. Market analysis and development forecasts for 2016-2021