US research firm foresees decline in global IT spend

San Francisco: Global purchases of information technology goods and services may decline by three percent in 2009, ending seven years of growth, US research firm Forrester said in its latest report on global IT market outlook.

It said global IT purchases by businesses and governments will fall to $1.66 trillion. The decline is a distinct shift from 2008, when global IT purchases increased by eight percent.

It will be the first time since 2002 that global IT spending sees a drop. IT purchases fell by six percent in both 2001 and 2002.

"Recessions in the US and other industrial countries will be the main cause of a 2009 slump, with currency fluctuations a secondary factor," the report said.

"Our forecast for 2009 rests on the assumptions that the economic recession in the US and other major economies will start to end in the second half of 2009," Andrew Bartels, vice president and principal analyst of Forrester, said in a statement.

"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," he added.

According to Forrester analysts, a weakening US dollar boosted 2008 IT spending growth rates, but a stronger dollar will hurt growth measured in US dollars in 2009.

They said that when measured using a mix of local currencies, the picture is a bit better, with global IT spending growth expected to be 2.5 per cent in 2009.

Purchases in Eastern Europe, the Middle East and Africa will do best with a projected five percent growth. Asia Pacific purchases are expected to rise by three percent.

However, when all of the regional numbers are equated to US dollars, there is a sharper slowdown in IT spending globally, the analysts noted.

They predicted that while software purchases will do a bit better than other IT sectors, all vendors will face a tough time until late 2009 or early 2010.

IT spending may recover in 2010, growing by nine percent in US dollars and six percent in local currencies, the analysts said.