Accelerating growth in the software and services markets and a rebound in the hardware market should boost worldwide IT market growth to nine per cent for 1999, according to a report from IDC.
The IT research company said that the stabilising of troubled economies, such as Thailand and Brazil, has strengthened the worldwide IT market, but said that total spend on IT will not hit the trillion dollar milestone until 2002.
IDC said worldwide IT spend in 1998 totalled $758 billion, an increase of 6.2 per cent over the 1997 value for end user spending.
However, despite the rebound in the market, the company said local economic setbacks have tempered worldwide average annual IT market growth to 9.5 per cent. Although this is an improvement on last year, the company said this was only a "modest" increase.
IDC analyst Stephanie Hutchinson commented: "Worldwide growth in spending on information technology continued to soften in 1998 as the economic crisis in Asia/Pacific spread to other regions of the world."
"However, it is important to note the effect of currency fluctuations upon these values. Rather than a net decline in demand for IT products and services, exchange rate devaluation profoundly affected It spending values in both 1997 and 1998," she said.
She added that while 1998 was a volatile year for the worldwide IT spending market, 1999 has been a year of recovery for many regional IT markets.
Both Eastern Europe and Asia/Pacific have shown a "considerable" improvement in spending for 1999 - she said growth is expected to rise from minus six per cent to two per cent in Eastern Europe and from minus nine per cent to eight per cent in Asia/Pacific.
Western Europe continued to post solid growth and should see stronger spending growth levels than North America, currently the biggest market, she said.
IDC said that resources devoted to solving the Y2K dilemma will not be suspended once the problem is cleared up, but will be reallocated to other forms of IT spending.
It said that for some companies, infrastructure projects put on hold would now be revisited. Areas such as CRM, analytic applications, supply chain automation and ecommerce will get significant attention, the report said.
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