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Global IT spending to grow 0.5 pc in 2009

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CIOL Bureau
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FRAMINGHAM, USA: The continued erosion of the global economy, including the prospect of negative GDP growth in many major countries, has led IDC to update its forecast for worldwide IT spending in 2009.

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The IDC Black Book now forecasts worldwide IT spending will grow by just 0.5 percent year over year in 2009 in constant currency, down from a November 2008 forecast of 2.6 percent growth. If the recent exchange rate trends continue, this will translate into a significant decline in revenues for US-based IT suppliers.

The greatest impact will be felt in global hardware markets, where overall spending growth will be –3.6 percent this year, led by a steep decline in outlays for servers, PCs, and printers/MFPs. In contrast, worldwide spending on software and IT services are each expected to grow 3.4 percent in 2009, down from 4.6 percent and 3.7 percent growth, respectively in the previous forecast. Worldwide IT spending in 2009 will be $1.44 trillion.

In the United States, IDC is now forecasting year-over-year growth of 0.1 percent in overall IT spending, down from the November forecast of 0.9 percent growth. Paralleling the worldwide market, hardware will experience a sharp decline in spending with –16 percent growth, while software and IT services spending will grow by 4 percent and 3 percent, respectively. The US IT spending will total nearly $491 billion in 2009.

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"Fourth quarter data from a number of key markets and geographies clearly shows that companies have been very quick to pull back their spending," said John Gantz, chief research officer at IDC. "The data also provides a clearer picture of how companies are curbing their expenditures. Investments in software and services are being maintained in pursuit of productivity and efficiency gains, while hardware spending is being slashed in an attempt to stretch refresh cycles and squeeze more out of existing assets."

Other highlights from the new IDC Black Book include the following:

* Overall IT spending in Western Europe is now expected to grow 0.1 percent year over year in 2009, down from the November forecast of 1.2 percent growth. IDC expects IT spending in Germany and the United Kingdom to remain essentially flat in 2009, while France and Italy will experience negative growth.

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* The forecast for IT spending growth in Asia/Pacific (excluding Japan) has also been reduced, with overall growth now expected to be 1.4 percent, down from the earlier forecast of 4 percent growth. IT spending in China is expected to grow 6.5 percent, down from 9.1 percent, and India's growth has been reduced to 5.7 percent from 10 percent.

* Japan will experience year-over-year IT spending growth of –1.8 percent in 2009, down from the previous forecast of 1 percent growth.

* Latin America will enjoy gains in all three market segments, driving overall IT spending to 4 percent growth in 2009, down from the November forecast of 8 percent. IT spending in Brazil will grow by 6 percent in 2009, down somewhat from the 9 percent forecast in November.

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* In Central and Eastern Europe, IT spending will grow –7.5 percent in 2009 as a result of worsening economic assumptions and business climate volatility.

* The Middle East and Africa is expected to continue on a growth trajectory of almost 8 percent in 2009, down slightly from the November forecast of 8.5 percent growth.

"The revised forecast is very close to the downside scenario we developed in November, which was based on the lowest worldwide GDP growth since World War II," noted Stephen Minton, vice president, Worldwide Markets and Strategies at IDC. "While the outlook for 2009 is now worse than we thought just three months ago, we still expect IT spending to recover somewhat in 2010 and gain momentum through the rest of the forecast period."