Global IT spend on the up

But analyst firm IDC warns that economic instability in the Eurozone is taking its toll

Across the globe: IT spend is on the up in developing nations, but the picture in western Europe is not so rosy

Global IT spend is on the rebound as businesses finally start to catch up with their hardware refresh, but Western Europe still faces a rocky road as the Greek debt crisis threatens stability in the eurozone, an analyst has claimed.

According to IDC figures, global IT spend is set to increase by 3.8 per cent at constant currency to $1.47tn (£1.025tn), led by hardware at 6.4 per cent.

Spending on software and services will increase by 3.1 per cent and 1.5 per cent respectively, the analyst said, with consumer spending on smartphones accelerating.

This is compared with last year, where global IT spend shrank by 4.2 per cent in constant currency.

Stephen Minton, vice president of worldwide IT markets and strategies at IDC, said: “IT spending growth in the US and emerging markets has been strong during the past two quarters. Some of this is down to easy comparisons with the same period a year ago, but it also reflects very real pent-up demand for infrastructure spending, including investment in solutions such as virtualisation and information management.

“Just as capital spending on hardware is the first thing to fall in a recession, it is also the first thing to come back up for air when IT budgets are surfacing,” he said.

Minton added that despite the relief that capital spending and general budgets are on the up, there are still some weak spots.

In particular, western Europe has been singled out, caused by the current debt crisis in Greece, which has raised concern over the short-term prospects for the European Union.

As a result, IT spending in western Europe is expected to be flat this year in constant currency, after a 6.5 per cent drop last year.

Anna Toncheva, programme manager and economist in IDC’s IT markets and strategies team, painted a fairly gloomy outlook for the short-term.

"Risky markets will remain volatile, despite the forestalled paralysis of the interbank lending market,” she said.

“There will be a period of intense exchange rate volatility as capital takes flight away from Europe to the US bond market and depresses the euro. China will be less motivated to de-peg from the dollar and revalue the yuan. Production and supply chain decisions will be impacted by these developments.”