Grexit threatens to cut Greek IT spending by $3.7bn

Greek IT spending set to fall steeply if the country leaves the Euro, following the "no" vote in the referendum

IDC predicts that IT spending by businesses in Greece could fall by 18% in 2016, with $3.7bn less spent over three years.

Following the “no” vote in the referendum when Greek citizens rejected proposed bailout conditions, the research firm has predicted two scenarios.

The first would see negotiations fail and Greece leave the Eurozone. “As a result, IT spend in Greece will see a significant decline. European IT spending will be somewhat affected, but not enough to move current expected growth rates into negative territory,” said IDC.

Alternatively, Greece will agree a bailout with other members and keep the Euro. IDC said if this happens the drop in business confidence will mean a double-digit decline in IT spending in Greece in 2016, but a lower rate than the first scenario. If this occurs, “overall western European IT spend will remain largely unaffected”, it said.

“The industry sectors whose IT spending could be more negatively impacted by the Grexit scenario are the public sector, financial services and consumer market. Tourism and accommodation – a sector that counts for almost 15% of the national gross domestic product for Greece – is suffering from the uncertainty of the last period," said IDC European industry solutions senior research analyst Andrea Siviero.

"Nevertheless a devaluation of a possible new currency could attract foreigner attention in the longer term,” he added.

In the second scenario, IDC said an agreement between the Greek government and the International Monetary Fund, the European Union and the European Central Bank would lead to a long-term reinforcement of the Eurozone. “Nevertheless this will not be sufficient to produce immediate positive effects for Greece, whose destiny will mainly depend on the political reforms that will have to be adopted," the company said.

According to IDC, Greece accounted for just 0.5% of western Europe's IT spending in 2015 and is currently the worst performing country in terms of IT spending.

"Whilse macroeconomic shocks such as a possible Grexit tend to affect most technology areas, we believe that hardware spending in the country will see a stronger negative impact, especially in the 2015-2017 timeframes, as recurring maintenance fees and multi-year contracts will protect software and services – at least to some extent," said IDC European infrastructure and software analyst Giorgio Nebuloni.

IDC said if the Grexit goes ahead there could see an overall reduction in annual IT spending in Greece between the peak in 2007 and 2016 of nearly 50%.

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