Europe's IT, telecom sector seen outpacing U.S

BRUSSELS: Europe's IT and telecoms sectors will continue to expand in 2005 and are expected to perform better than the United States, driven by stronger demand, industry association EITO said.

The European Information Technology Observatory (EITO) said it expects Europe's information and communication technology (ICT) markets to grow 4.1 percent in 2005, up from around 3 percent in 2004 and above projected U.S. growth of 3.9 in 2005.

Japan's ICT sector was seen expanding by only 2.7 percent.

The data confirm the sector has recovered from the deep crisis that followed the burst of the dotcom bubble in 2000, although it is still far from the double-digit yearly growth rates seen at the end of the 1990s.

"We can confirm what we said in the last EITO report (last year). The ICT markets have definitely emerged from the tunnel of the deep crisis of 2001-2003," EITO chair Bruno Lamborghini said in a statement.

Europe's ICT represents 32.1 percent of the global market.

Worldwide the ICT markets is expected to expand by 4.3 percent in 2005 and 4.8 percent in 2006, with China driving growth in developing countries.

BROADBAND DRIVES GROWTH

Investment in further development of broadband and third-generation mobile phones networks as well as digital television are seen driving telecommunications, EITO said.

The report also noted that companies were starting to shift their focus from cost reduction to investments aimed at improving their competitiveness, thus benefiting the IT sector.

Demand for new software, some of which is aimed at allowing firms to comply with new banking and accounting regulations, were driving the higher than average growth in the software market, the report added.

EITO said it expected the 25-nation EU ICT market to grow by 4.0 percent in 2005, with Poland and the Baltic States -- Estonia, Lithuania and Latvia -- nearing double-digit growth.

In Western Europe, the British and Irish markets were seen shining with projected growth of 6.1 percent and 4.6 percent respectively.