Macroeconomic and Industry Environment.

Anticipated macroeconomic developments.

In October 2016, the International Monetary Fund (IMF) revised downward slightly its outlook for global economic growth, with projections set at 3.1% for 2016 and 3.4% for 2017. In each case, this is 0.1 percentage points lower than the forecast presented by the IMF in April 2016. As regards its dampened outlook for the industrialized nations, the IMF cites repercussions from the Brexit referendum and weaker growth in the United States as key factors.

According to the IMF, economic growth in 2017 and in the medium term will be driven by both the emerging markets and the advanced economies. In the long term, however, prospects for the industrialized region are thought to be less favorable given the prevailing demographics and sluggish progress when it comes to improving productivity levels.

The IMF's projections are based on the following assumptions:

  • A gradual normalization of conditions in economies currently under stress, with a general pick-up in growth for commodity exporters
  • A gradual slowdown and rebalancing of China's economy with medium-term growth rates at close to 6%
  • Resilient growth in the other emerging market and developing economies

Industry environment.

Based on market analyses, global spending on IT will again rise in 2017 – in both the banking sector and the retail industry.

According to figures published by the market research firm Pierre Audoin Consultants (PAC) in August 2016, IT investment in the banking sector is set to expand from €368.7 billion in 2016 to €384.1 billion in 2017. This represents an increase of 4.2%. Based on PAC's research, the retail industry is also poised to ramp up investment in IT, with spending in 2017 forecast to rise by 3.8% compared with the calendar year 2016. In absolute terms, this would be equivalent to IT expenditure of €156.7 billion in the retail industry in 2017, on the back of €150.9 billion in 2016. For both industries, PAC anticipates much higher growth in the areas of software, professional services, and outsourcing than in hardware.

Global IT Expenditure in the Banking Segment.

€ billion

Global IT Expenditure in the Banking Segment (bar chart) Global IT Expenditure in the Banking Segment (bar chart)

Global IT Expenditure in the Retail Segment.

€ billion

Global IT Expenditure in the Retail Segment (bar chart) Global IT Expenditure in the Retail Segment (bar chart)

Overall assessment of the business environment.

The wider market picture set to emerge in fiscal 2016/2017 is confirmation that the fundamental approach taken by the Group is well judged and that we can benefit from the rapidly advancing process of digitalization. At the same time, we have improved our operational capacity to respond to or smooth out potential fluctuations, e.g., in the emerging markets.