Increasing protectionism and escalating trade tensions between the United States and China threaten the growth prospects of the ICT sector. In Spain, it will grow by 2% annually in the next five years.

The growth of Information and Communication Technologies (ICT) seems unstoppable in recent years. We live in an increasingly connected and digital world, which has an impact on each and every level of society.

The last predicts that global sales of the ICT sector will increase above 3% in 2019. It is expected that almost all segments will evolve positively, especially the software business (+ 8%) and its associated services (+ 5%). Specifies that the Software-as-a-Service (SaaS) is driving growth in almost all segments of software, while communications services continue to drive most of the spending.

However, black clouds loom over the horizon that obscure their good prospects. Thus, the report warns that the sector will face the impact of “the escalating trade tensions between the United States and China,” a factor that the entity considers “represents the increased risk for these industry perspectives. ”

Crédito y Caución recalls that the United States raised tariffs to 200,000 million dollars of Chinese imports last May. Rates increased from 10% to 25%. Although ICT was not significantly affected, the study notes that «impose tariffs on virtually all remaining Chinese imports and Beijing retaliatory countermeasures would definitely affect industry performance,» weakening confidence of companies and consumers worldwide.

The entity details that about 88% of Chinese ICT imports are electronic components that are assembled in mainland China and then exported. Thus, the increase in US tariff barriers at 25% for all its Chinese telecom products and smartphone components would slow the growth of ICT manufacturers, in addition to causing the transfer of production plants that brands have in that country.

On the other side of the Pacific Ocean, the report highlights that many North American companies that import ICT from China «have begun to accumulate inventories or import goods from other Asian markets,» as a war trade between the two countries would raise the prices of an important range of electronic components in the United States. In this scenario, Crédito y Caución foresees that it will be retailers who absorb part of the new costs. And in a very competitive market like this, the impact will be a narrowing of its margins.

The conflict between the United States and China will also splatter the rest of the world. One of the most affected countries will be Japan, that is already being harmed by US restrictions on Chinese suppliers. In addition, the confrontation could lead to an economic slowdown in China, generating a drop in Japanese exports throughout Asia.

Also, the possible US decision to block any company, national or foreign, that does business with Huawei could have a great impact on many ICT providers around the world, especially in Asia and the American country itself.

With respect to Spain, the report indicates that ICT sales have increased in the last two years, but the growth in turnover has slowed down in 2017 and 2018 (+ 1.2% and + 1.7% respectively), after an increase of 5.4% in 2016 and an average growth of 5.5% in the last five years . This is due to the slowdown in demand from both private and public buyers. And sales are expected to grow 2% annually over the next five years.

Crédito y Caución points out that the Spanish ICT trade balance is structurally negative, since the export level is low. In addition, it needs to the margins of many ICT companies they remain stable, although tight, especially in the wholesale and retail subsector, due to high competition in the sale price.