IT spend faces first drop since 2002

Global spending on IT goods and services this year is predicted to decline for the first time since 2002, according to research firm Forrester.

The Global IT Market Outlook 2009 report reveals IT purchases from across the private and public sector rose eight per cent last year. This represented a seventh consecutive annual growth, after a six per cent decline in both 2001 and 2002. However, Forrester is forecasting that spending will drop three per cent this year to $1.66 trillion (£1.13tn).

The outlook is slightly rosier when using a mix of appropriate local currencies, as 2.5 per cent global growth is projected in that case. Regionally, US purchases are expected to grow 1.6 per cent, while those in western and central Europe will rise 1.3 per cent. Those in eastern Europe, the Middle East and Africa will spike five per cent while spending in the Asia-Pacific region will increase three per cent. But when each of these is converted to US dollars, it demonstrates a slowdown in global IT spending.

Forrester principal analyst Andrew Bartels said: "The fact that 2009 IT purchases growth is so much weaker in US dollars than in local currencies means US vendors with significant overseas business will feel a double dose of pain as both the economic environment and currency market will work against them for much of 2009.”

Investment in computer equipment is forecast to endure the sharpest decline, with spending set to fall four per cent to $434bn this year. Purchases of communications equipment are predicted to decline three per cent to $353bn, with spending on services and outsourcing forecast to fall by the same margin to $484bn. Projections for software investment are as close as the report gets to bearing good news, with spending forecast to stay flat at $388bn.

Bartels added: "Our forecast for 2009 rests on the assumption that the economic recession in the US and other major economies will start to end in the second half of 2009. For IT vendor strategists, the global IT market will be a gloomy one in 2009, with prospects of improvement in 2010. Unlike in past years, there are no significant growth markets to offset the weak ones.”