Worldwide IT spending outlook for 2012 lowered after Thailand floods

Worldwide IT spending is forecast to hit $3.8tn in 2012, up 3.7 per cent on 2011 figures, according to analyst Gartner. However, growth prospects have been downgraded in the wake of floods that hit Thailand towards the end of last year.

Gartner had previously predicted growth of around 4.6 per cent for the market, but has now revised its estimates, with growth for the four largest IT sectors – computing hardware, enterprise software, IT services and telecommunications equipment – all downgraded.

Growth will be significantly lower than that achieved in 2011, which saw an overall increase of 6.9 per cent on 2010 figures. Gartner analyst and report author Richard Gordon explained to V3 that this was due to several factors affecting the market.

"The overall global economy has been poor for a while and the eurozone crisis made things even worse. While regions such as China, India and the Middle East are still spending, the slow-down in the US and Europe is having a major impact," he said.

"We could even see growth fall towards zero if things get even worse but, at the moment, although 3.7 per cent is quite low, it is a reasonably stable holding pattern for the market."

As a result of the financial crises engulfing Europe the report said it expects spend in the region to decline by 0.7 per cent in the next 12 months as both businesses and consumers cut back on their spending.

Furthermore, Gordon explained that events in Thailand were particularly significant for the worldwide market due to the nation's importance in the global production of hard-drives, both at a component level and finished goods.

"The situation in Thailand has been a slow-burning issue and some manufacturers seem to have been in denial about how bad it could get as the inventory already in the channel mitigated against the initial impact," he said.

"However, we think production levels could drop by as much as 25 per cent in 2012 as the issue starts to become more relevant."

The floods were the second major disaster to affect technology sales in 2011, with the Japanese tsunami in March affecting the semiconductor industry, although this did recover during the year.

Gordon added that such events could make manufacturers consider spreading the geographic base for the production of key technologies to diminish the effect that any future events would have on the market.