'2008 worse than expected for global IT'

The global outlook for 2008 IT purchasing could be grimmer than previously believed due to the US economic difficulties.
Written by Suzanne Tindal, Contributor

The global outlook for 2008 IT purchasing could be grimmer than previously believed due to the US economic difficulties.


Analyst house Forrester Research has downgraded its 2008 forecast for global IT purchasing, projecting that US spending on IT goods and services will grow 2.8 percent year-on-year, down from its previous forecast of 4.6 percent; while global purchases of IT goods and services will grow six percent, down from the previous forecast of nine percent.

Forrester Research's figures fall broadly in line with those of fellow analyst house Gartner, whose most recent global IT spending growth forecast is also around six percent.

The US financial situation is the cause for the downgrade. "While it is by no means certain that the US economy will in fact experience a recession, the risks of one are high enough to justify a more conservative outlook for the IT market," Forrester Research VP Andrew Bartels said in a statement.

The global market will be affected by any downturn in its largest regional market for IT goods and services, he continued, although the size of that market is getting ever smaller -- with the US falling from 40 percent of all global IT purchasing in 2003 to a forecast 33 percent in 2008, Forrester said.

IDC research manager of IT spending, Jean-Marc Annonier, said he was unconvinced the US problems will have a large effect on Australia given its dependency on the Asian market and the mining sector, although how unsullied Australia emerges will depend on the strength of the US recession.

Other factors will also come into play, Annonier said. "The whole interaction between the inflation and the RBA remains to be seen," he added, saying the bank has not managed to slow down the economy yet, but that if it continues to hike up interest rates it might succeed in doing so.

Asia Pacific will beat the global growth rate to reach a nine percent increase in IT purchasing in 2008, according to the Forrester forecasts -- although the rate marks a considerable fall from the 15 percent growth achieved in 2007.

None of this growth will be occurring in enterprise spending in Australia, according to Gartner's November forecast for 2008, which estimates growth to total a mere 0.4 percent.

Australian CIOs expect their budgets to increase by only 1.1 percent, while in the rest of Asia excluding Australia and Japan, IT budgets are expected to grow by 8.3 percent according to Gartner.

All IT sectors were not born equal, the Forrester forecast reports, saying that software, consulting and outsourcing will outperform hardware and communications equipment purchases.

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