If the war in Iraq continues, global IT spending will
rebound this year, growing 2.3% over last year, said market
researcher IDC.
The revised forecast, offered in the company's analysis, was
made because of the war and uncertainty about the stability of some
economic regions.
Assuming a "relatively short war" and economic stability, IDC
predicts global IT spending this year will reach $852bn
(£544bn).
Broken down by region, European IT spending growth will lead
with 2%, with a 1.5% increase in the US and a 1.4% decline in
Japan, which continues to suffer economic problems including an
unemployment rate that has risen to 5%, the highest in a
decade.
Spending growth will be spurred by software, with a predicted
increase of 4.5% worldwide. Hardware, however, will continue to
slump with an 0.5% decline, IDC analysts said.
Spending on services will also increase, with 3.7% growth
predicted.
Overall growth will continue next year, with an increase of 4%
to 6%, and hit 6% to 7% in 2005, analysts said. The global IT
market will reach $1tn in revenue by 2006.
Low profits and the business climate are the two top issues that
cause companies to cut back on IT spending, but there is a demand
from the past couple of years that will gradually start to overcome
these inhibitors which will shift toward an IT spend increase, said
Stephen Minton, program director for IDC worldwide IT markets.
According to IDC, when the war ends, there will be an upturn
overall in the US economy at least, with other regions also poised
to see improvements
In the Asia-Pacific region, the outlook also remains mixed,
Minton said. China is forecasted to experience a 7% to 8% growth in
gross domestic product next year. Insurance and banking companies
are moving into China and the telecommunications sector there also
shows promise for growth.
Elsewhere in the Asia-Pacific region, Australia will continue to
be strong and Southeast Asian countries will stay on the road to
recovery.
There was a big quetion mark over the Middle East because of the
effect a prolonged war would have there, as a long war will damage
its economy overall.
IDC forecasted that after the war there will be a gradual
recovery for corporate profits and business confidence will
improve, which will mean a global increase in IT spending.