Forrester: Evolving Tariff Negotiations Dampen APAC Tech Outlook

Forrester: Evolving Tariff Negotiations Dampen APAC Tech Outlook

The original forecast for 6.5% APAC tech spending growth is expected to be revised down by 1–2% amid rising uncertainty

SINGAPORE, May 14, 2025 /PRNewswire/ -- Forrester (Nasdaq: FORR) initially projected that technology spending in the Asia Pacific (APAC) region would grow by 6.5% in 2025 to reach US$722 billion, up from US$678 billion in 2024 and on par with the growth experienced last year. The imposition of broad-based tariffs by the US, however, is expected to increase technology costs, disrupt supply chains, and dampen overall IT investments across the region. As a result, initial tech spending forecasts now appear optimistic, with heightened uncertainty expected to lower growth by 1 or 2 percentage points, depending on specific country exposure and IT spending categories.

Despite global volatility, adoption of AI and cloud will continue at a rapid pace and fuel robust spending growth on software and IT services in Asia. India and Vietnam, for example, were initially projected to see tech spending grow by 11% and 10%, respectively. Although these figures may soften under the weight of tariff-related disruptions, both countries are still expected to outperform the regional average — driven by strong momentum in digital infrastructure and aggressive modernization agendas.

According to Forrester's Asia Pacific Tech Market Forecast, 2024 To 2028, the software market is set to grow 10.4% in 2025, with AI and cloud services dominating demand. Growth is especially pronounced in Southeast Asian economies, where digital transformation programs are advancing rapidly. Meanwhile, the IT services category is expected to grow by 6%, propelled by rising demand for hybrid cloud solutions, cybersecurity consulting, and system integration to manage increasing regulatory complexity. While these forecasts were established prior to the latest tariff developments, Forrester believes that the fundamental drivers of growth — AI, cloud, and digital infrastructure — remain intact.

In 2025, Forrester's optimistic projections of tech spending growth across countries in Asia Pacific are as follows:

• 6.6% in Australia. Totaling nearly A$79 billion (approximately US$52.4 billion) in 2025, investments in cybersecurity, generative AI, and cloud solutions will drive tech spending growth in Australia.
• 7.7% in China. With government initiatives set to boost consumption, bolster economic recovery, and improve technological self-reliance, China's tech spending will reach RMB 1.9 trillion (approximately US$264 billion) in 2025.
• 11% in India. Fueled by strong enterprise investments, the government's push for digitalization, and a surge in venture capital funding, India's tech spending is expected to reach ₹5 trillion (approximately US$59 billion) in 2025.
• 5.6% in Singapore. With AI rapidly gaining traction across key sectors and the government's implementation of the Digital Connectivity Blueprint to improve Singapore's digital infrastructure, the city-state's tech spending is expected to reach S$25.5 billion (approximately US$19 billion) in 2025.
• Strong in Southeast Asia. Tech spending in 2025 will grow by 8.5% in Indonesia, 7.2% in Malaysia, 9.4% in the Philippines, 7.7% in Thailand, and 10% in Vietnam, totaling approximately US$69 billion. The strong growth is due to Southeast Asian governments actively promoting digitization and a growing focus on cybersecurity, with AI playing a key role in enhancing threat detection and online safety.

"Asia Pacific's tech spending growth continues to demonstrate the region's commitment to leveraging technology to build resilience and drive innovation in an uncertain global climate," said Frederic Giron, VP and senior research director at Forrester, "but the immediate economic headwinds and heightened uncertainty stemming from the new tariffs are likely to influence the pace, prioritization, and funding of technology initiatives in the coming months. Business and tech leaders must engage in comprehensive scenario planning to anticipate various outcomes and develop adaptive strategies that ensure organizational resilience."

Resources:

• Read more about Forrester's Asia Pacific Tech Market Forecast, 2024 To 2028, in this blog or download the report here (client access required).
• Discover how Forrester supports IT leaders and how to get the most out of emerging technologies being deployed.

About Forrester
Forrester (Nasdaq: FORR) is one of the most influential research and advisory firms in the world. We empower leaders in technology, customer experience, digital, marketing, sales, and product functions to be bold at work and accelerate growth through customer obsession. Our unique research and continuous guidance model helps executives and their teams achieve their initiatives and outcomes faster and with confidence. To learn more, visit Forrester.com.

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SOURCE Forrester