There was mixed news for the IT industry yesterday as IDC warned that poor economic conditions would have a severe effect on new technology spending. But another report suggested the possibility of the first increase in the growth of technology spending in seven months.
With new economic data pointing to a more severe downturn in western Europe, the likelihood of the US technology slowdown spreading to Europe is increasing, according to IDC.
The research company's most gloomy projection could be a global slowdown that would reduce worldwide IT spending between 2001 and 2003 by as much as $150bn, with $50bn less demand from Europe.
This projection would mean that IT spending in Europe would rise by only 7.9 per cent in 2001, although IDC expects growth of around 11 per cent this year.
"For European suppliers, the importance of understanding the broad economic picture has never been more important," said Stephen Minton, manager of IDC's Global IT Economic Outlook research programme.
But after a recent poll of US chief information officers, CIO Magazine and Deutsche Banc Alex Brown (DBAB) reported renewed spending confidence associated with the fear of playing catch-up during an anticipated economic recovery.
"The results encouragingly suggest that the technology slump has hit the bottom, shifting directions towards a bounce back," said Ed Yardeni, chief investment strategist at DBAB. "Now it's a question of the strength of the rebound."
The poll predicts that IT budgets will grow by six per cent over the next 12 months, up from a five per cent prediction in May but down sharply from 22 per cent last November.
It also reported that IT budgets grew an average of six per cent over the previous 12 months, up slightly from the four per cent May estimate, but again down sharply from 19 per cent last September.
When asked about seven specific IT spending categories, data storage was the only one that showed some improvement, with increases in spending during the 12 months rising to 51 per cent from 49 per cent in May.
Among the respondents, 42 per cent said the current economic slowdown would not affect their IT spending plans in 2001, while 42 per cent agreed that it will only have a mild effect. Another 26 per cent see "tight financial conditions" as the main problem.
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