IDC: War Affects IT Spending Growth

Worldwide IT spending is expected to pick up speed and return to positive growth in 2003 — if the war with Iraq is short and other regional economies strengthen, according to a new report from industry analyst firm IDC.

Economic and geopolitical uncertainty has had a dramatically negative impact on IT spending since the fourth quarter of 2002, IDC reports. With worldwide GDP growth in a steady decline and U.S. corporate profits facing the most severe downturn since the Great Depression, the gradual recovery that was emerging out of the ashes of corporate accounting scandals and terrorism has stalled.

”The outlook for the next six months continues to be extremely volatile and a double-dip IT recession can’t be ruled out in a worst-case scenario,” says Stephen Minton, director of IDC’s Worldwide IT Markets group. ”Once the fog of war has cleared, there will be a gradual recovery in corporate profits and business confidence, and this will translate into increased IT spending.

”We expect to see improved market conditions in every region in 2004,” Minton adds. ”And by 2006, the global IT market will generate $1 trillion in revenues.”

According to IDC’s new forecast, total worldwide IT spending this year will hit $852 billion. That represents a growth of 2.3 percent over last year. The new forecast, however, is lower than the previous forecast of 3.7 percent growth, mainly due to continued economic and geopolitical troubles.

IDC analysts predict that the U.S. will see a 1.5 percent growth. Europe will experience a 2 percent growth and Japan will suffer a 1.4 percent decline.

The analyst firm also predicts that the worldwide hardware market will suffer slightly this year, with a .5 percent decline. Software, however, will see a 4.5 percent growth and services will experience a 3.7 percent growth.

Analysts warn that all the numbers are dependent on economic and political stability by the end of 2003.