IDC remains bullish on IT growth

A revised report by analyst IDC has suggested that, if the war in Iraq is short and regional economies strengthen, worldwide IT spending may rise to positive growth this year.

New forecasts published yesterday in IDC's industry-standard Worldwide Black Book show that economic and geopolitical uncertainty have had a dramatically negative impact on IT spending since the fourth quarter of 2002.

With worldwide GDP growth in steady decline, and US corporate profits facing the most severe downturn since the Great Depression, the gradual recovery that was emerging from the ashes of corporate accounting scandals and terrorism has stalled.

But IDC has predicted that total worldwide IT spending in 2003 will reach $852bn (£544bn), up 2.3 per cent on last year.

The new figure is lower than its previous forecast of 3.7 per cent growth, largely due to continued worldwide uncertainties.

IDC expects growth to be 1.5 per cent in the US and two per cent in Europe, while Japan will see a 1.4 per cent decline.

"The outlook for the next six months continues to be extremely volatile, and a double-dip IT recession cannot be ruled out in a worst-case scenario," said 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. And by 2006, the global IT market will generate $1tn in revenues."

IDC expects the industry to adjust to growth rates of six to seven per cent in the coming three to five years. But the analyst warned that past double-digit growth rates will not return.

"Those days have gone, at least until the next paradigm shift or speculative bubble. But we will recover to an industry which modestly outpaces growth in the rest of the economy," concluded Minton.

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