Ongoing US tariff policies disrupt APAC growth hopes, prompting downward forecast revisions and complicating regional digital transformation plans.

The ongoing US tariff negotiations remain highly fluid, casting uncertainty over the global economic landscape, and prompting widespread concern about their potential impact on technology markets in the Asia Pacific region (APAC).

One market research and consultancy had previously projected robust growth for APAC technology spending (in spite of global pre-US election jitters), but recent developments have forced a reassessment of these expectations as the new tariff regime threatens to raise technology costs, disrupt supply chains, and dampen IT investment across the region.

What follows is the list of revised APAC growth and trend estimates.

Revised forecasts and emerging trends

The original forecast of 6.5% growth in APAC technology spending for 2025 (reaching US$722bn) is now expected to be revised downward by 1–2 percentage points, depending on each country’s exposure to tariffs and the specific IT spending categories involved. Also:

  • Despite these headwinds, rapid adoption of AI and cloud technologies are predicted to continue to drive robust growth in software and IT services across the region.
  • The software market is forecast to expand by 10.4% in 2025, with AI and cloud services accounting for a significant share of demand.
  • IT services spending is projected to grow by 6%, fueled by the rising need for hybrid cloud solutions, cybersecurity consulting, and system integration to manage increasing regulatory complexity.
  • India and Vietnam, initially expected to see tech spending growth of 11% and 10% respectively, may see slightly softer figures, but are still set to outperform the regional average due to strong digital infrastructure momentum and aggressive modernization agendas.
  • Country-specific growth projections for 2025 include:
    • Australia: 6.6% growth, reaching nearly A$79bn (approx. US$52.4bn), driven by investments in cybersecurity, generative AI, and cloud solutions.
    • China: 7.7% growth, totaling RMB1.9tn (approx. US$264bn), supported by government initiatives to boost consumption and technological self-reliance.
    • India: 11% growth, reaching ₹5 trillion (approx. US$59bn), propelled by enterprise investment, government digitalization, and venture capital.
    • Singapore: 5.6% growth, totaling S$25.5bn (approx. US$19bn), with AI adoption and digital infrastructure upgrades leading the way.
    • Southeast Asia: Strong growth rates, including 8.5% in Indonesia, 7.2% in Malaysia, 9.4% in the Philippines, 7.7% in Thailand, and 10% in Vietnam, with total spending around US$69bn, driven by government-led digitization and a focus on cybersecurity and AI-enabled threat detection.

According to Frederic Giron, Vice President and Senior Research Director, Forrester, the firm revising its forecasts: “APAC’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, 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…”

Many other market and business research consultancies have also been forced to hurriedly revise their forecasts in light of recent tariff shocks and with likely more policy surprises en route.