Fears of double-dip recession cloud IDC forecast for IT spending

By Billy MacInnes The next three months will be "crucial" in predicting whether IT spending will continue to grow in 2010 and beyond or fall to less than one per cent growth in the face of a double-dip recession, IDC has warned. Faced with a market "in the middle of two powerful

By Billy MacInnes

The next three months will be "crucial" in predicting whether IT spending will continue to grow in 2010 and beyond or fall to less than one per cent growth in the face of a double-dip recession, IDC has warned.


Faced with a market "in the middle of two powerful and opposing forces" of pent-up demand for new technology and a potential loss of confidence in the global economy, IDC has elected to provide two conflicting forecasts for global IT spending for the rest of the year and into 2011.


IDC reported that the first half of the year has seen a quick rebound in IT spending, sparked by pent-up demand for PCs, servers, storage and networking equipment and a wave of intense IT investment in emerging markets such as China, India, Brazil and Russia.


As a result, it has raised its forecast for IT spending for 2010 to $1.51tn (£949bn) on growth of 6%. But the market research company has also tempered its optimism with an alternative scenario if the fears of a double-dip recession prove true.


Anna Toncheva, programme manager and economist with IDC's IT Markets and Strategies Group, said there were "very real reasons to be concerned about the near-term prospects for the global economy", citing fragile business confidence and financial turmoil in Europe allied to government austerity measures. 


If a double-dip recession does occur, IDC predicts IT market growth would be less than 1% in 2011 and recovery would be "sluggish" in 2012. Stephen Minton, IDC vice president of Worldwide IT Markets and Strategies, stated the next three months would be crucial to determining which of the forecasts would become more likely.


"In the meantime, IT vendors should plan accordingly by understanding the potential impact on their near-term revenues," he cautioned.

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