Tech spending in Greece could drop to half of its pre-crisis level if the country ends up leaving the euro.
Analyst IDC has looked at what is likely to happen if negotiations between Greece and its creditors fail and it leaves the eurozone, and also the consequences if Greece manages to come to an agreement on a bailout and keep the euro. Neither scenario has much good news for IT spending or IT employment in the country, which is already suffering from a tech brain drain as developers leave in search of jobs elsewhere.
The Greek tech sector has 4,500 companies with a turnover of €17.1bn and accounts for around four percent of Greece's economic output.
According to IDC, Greek IT spending has already dropped by a third compared to its 2007 pre-crisis peak. If Greece does leave the eurozone, then IT spending might drop by half from its 2007 levels by 2016 - a decline of just under $2bn.
If Greece fails to come to an agreement on financing its deficits, defaults, and exits the eurozone, likely causing the flight of foreign companies from Greece and a lack of finance for new projects, Greek IT spending would drop by 14 percent this year and another 18 percent next year, IDC calculates.
The effects on spending in other Western European countries will be modest, but there may be some slight effect in countries more exposed to Greek debt, such as Germany, France, and Italy. Even so, the resulting uncertainty around the future of the eurozone and the negative impact on business confidence will mean that growth in Western European 2016 IT spending will only reach 0.8 percent, down from the previously forecast of 1.6 percent.
Even if Greece does stay in the euro, it will still lag behind with respect to other Western European countries, at least in the short term, thanks to continued EU austerity measures. In terms of Greek IT spending, this could lead to a seven percent contraction in 2015 and 12 percent drop in 2016. In this scenario, Western Europe's total IT spending growth in 2016 would still grow one percent, with a relatively quick return to the previous forecast growth levels of 1.6 percent growth.
Either way the impact on broader European spending is likely to be muted: Greece will account for just 0.5 percent of Western Europe's spending on hardware, software, and services this year and is already the worst performing Western European country in terms of IT spending, expected to be effectively flat through to 2019.
"Whilst macroeconomic shocks such as 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," Giorgio Nebuloni, IDC associate research director, said.
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