Government austerity lowers Gartner's expectations


Government austerity lowers Gartner's expectations

Karl Flinders

Analyst company Gartner has pegged back its prediction for IT spending growth this year as a result of a strengthening dollar and public sector spending cuts in Europe.

Gartner said in the first quarter of this year that overall IT spending for the full year would grow 5.3% but it now predicts a reduced figure of 3.9%.

Total worldwide IT spending in 2010 is expected to be $3.35trn (£2.25trn) in 2010. This is 3.9% more than the $3.22trn in 2009, which was a 4.9% decrease compared to 2008.

The reduced government spending in Europe is having a significant effect.

"Longer-term, public-sector spending will be curtailed in Europe as governments struggle to bring budget deficits under control during the next five years and to reduce debt during the next 10 years," said Richard Gordon, research vice-president at Gartner.

"Private-sector economic activity will also likely be hindered because of the direct impact of austerity measures on key government suppliers and the indirect impact caused by the ripple effect. An effective policy response will be critical to stimulate investment in general and in IT in particular."

Gordon said CEOs see 2010 as a year to return to growth, " enable growth strategies, CFOs expect increased IT spending", he said.

"However, CIOs are seeing only marginal increases in budgets and are constrained to essential enterprise IT spending with discretionary spending still on hold. In the consumer sector, confidence is improving, although consumers are still wary of the threat of unemployment."

Further commentary from Gordon here.

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