And mirroring Australia in growth, spending on technology products and services in New Zealand will increase by 2.5% to reach almost NZ$12 billion in 2018.
Gartner managing vice-president Matthew Boon says the overall growth rate in Australia and New Zealand is consistent with most western economies.
Speaking at Gartner’s Symposium/ITxpo on the Gold Coast this week, Boon said, "What is happening is a shift in the type of spending, towards off premise technologies such as cloud (SaaS and Infrastructure), analytics and security and away from traditional IT, for example."
"Device vendors have moved away from selling low-cost, entry level devices, instead focusing on the mid-to-high end of the market, along with providing better performance and user experience," said Boon. "Simply meeting a low-end price point is not successful in growing the market significantly and it hurts the vendors’ bottom line."
Gartner also reveals that enterprise software continues to show strong growth in Australia, with software spending projected to grow 11.3% in 2017, and a further 11.7% in 2018 to total $12.7 billion.
And Gartner forecasts the highest growth will come from content services and customer relationship management (CRM) software, followed by communications and collaboration software and analytics.
"With Microsoft launching Azure data centres in Canberra, and Salesforce now live on Amazon Web Services (AWS) cloud infrastructure in Australia, more barriers to using cloud applications are being broken down, especially for the public sector. Conversational interfaces for customer service are also attracting a lot of interest in Australia," Boon said.
The Gartner report shows that IT services continue to represent the largest area of spending in Australia and is on pace to grow 2% in 2017 to reach $29.9 billion, increasing 1.8% in 2018 to reach $30.4 billion.
Across the Tasman, New Zealand software is also the fastest growing category of spending while communications services (including fixed and mobile voice and data) attracts the largest pool of investment.
New Zealand software spending is projected by Gartner to grow 9.2% in 2017, and to grow a further 9.7% in 2018 to NZ$1.6 billion.
Meanwhile, the devices segment in New Zealand is expected to show a return to growth in 2018 after falling 2.9% in 2017.