IDC lowers IT spending forecast

Weaker than expected economies in Europe and Japan have forced analyst firm IDC to lower its predictions for overall growth in IT spending this year.

The first quarter of 2005 still fell within the analyst firm's earlier predictions, but IDC saw European companies holding back on large IT purchases at the end of the last quarter.

"We remain focused on the downside of expectations for the second quarter and the rest of the year," said Stephen Minton, vice president of worldwide IT markets at IDC.

The analyst now predicts four per cent growth in European IT spending for this year, one per cent in Japan and five per cent in the US. Earlier estimates projected six, three and six per cent respectively.

IDC warned that currency fluctuations, rising oil prices and growing interest rates could further deter IT investments.

But the company also spotted a few bright areas for the IT industry. New projects will centre around security, regulatory compliance, infrastructure management and business intelligence. And the emerging economies of China, India and Russia offer strong growth opportunities.

A growing need for bandwidth, and the deployment of wireless networks, are set to spark growth for network equipment makers.

The analyst estimates that the networking market will reach $61bn this year. Projected growth between 2004 and 2009 on average will exceed 10 per cent per annum.