EU to overtake US in ICT growth

March 3, 2005

Brussels, 02 Mar 2005

The EU ICT (information and communications technologies) market is expected to overtake that of the US and Japan thanks to a growth rate of four per cent in 2005, compared to 3.3 per cent in 2004 and 0.9 percent in 2003, claims a new report.

The results of the 2005 edition of the European Information Technology Observatory (EITO), presented on 1 March, found that the stronger growth in ICT in the EU is driven by an increasing demand in all key IT sectors.

'European companies are starting to shift their focus from investments aiming at cost reduction to investments which tend to achieve competitive advantages through innovation,' states the report.

According to the report, revitalised sales cycles are backing the expansion of the computer hardware sector, while new software infrastructures are driving higher than average growth in the software market. Regulatory compliance (for example Basel II and the International Accounting Standard) will sustain this trend. Within IT services, outsourcing continues to be the fastest growing sector, while in the telecommunications market, expansion of broadband is accelerated by data services, video and other types of digital content in both the fixed and mobile areas.

'Moreover, investment in further development of DSL and UMTS infrastructures as well as in Digital Television (DTV) is driving growth in the communications sector,' said EITO Chairman Bruno Lamborghini.

Although these trends indicate that the EU25 will reach an estimated 32.1 per cent share of the worldwide ICT market in 2005 (33.8 per cent of the worldwide IT market and 30.7per cent of the worldwide telecommunications market), the dynamics of ICT continue to vary from one Member State to another.

'In 2005, the strongest growth among European countries can be observed in Ireland and the UK, with rates predicted to be reaching 6.1 per cent and 4.6 per cent respectively, well above the EU average of 4.0 per cent. Among the new Member States, Poland (10.1 per cent) and the Baltic States (9.2 per cent) are driving growth in 2005,' explains the report.

The reason behind the significant growth of ICT in the new Member States is that the implementation of their National Development Plans (NDPs) is stimulating spending at central and local government level, as well as within education and small and medium-sized enterprises (SMEs). This is having a significant impact on ICT market development.

In terms of the worldwide ICT market, 'Europe is forecast to perform better (+4.1 per cent) than the US with an expected growth of 3.9 per cent in 2005 and Japan with an increase of only 2.7 per cent,' comments the report. 'Overall, worldwide ICT markets will show a further strengthening in the near future: EITO experts forecast a plus of 4.2 per cent in 2005 and 4.9 per cent in 2006 for the IT sector, while in telecommunications growth of 4.4 per cent and 4.7 per cent is expected,' it adds.

Aiming at full diffusion of broadband access in all European regions in order to avoid a broadband divide is one of the aspects Europe needs to concentrate on, believes Mr Lamborghini, who says that further features are the development of the digital content industry and online value added services, trans-European communication networks, promotion of new skills, trans-European skill mobility and new entrepreneurship.

'Europe has the potential to reach ambitious targets in becoming a prosperous knowledge society of 500 million people,' Mr Lamborghini concludes. To access the report, please visit:

CORDIS RTD-NEWS / © European Communities
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