Worldwide IT spending forecasts on the up

The International Data Corporation (IDC) has raised its projection for annual global IT spending in 2010 to $1.51 billion, a growth according to constant currency. Hardware spending will be up 11 percent to $624 million, while software and services spending will rise four and two percent respectively.

The first half of 2010 did well by any standard let alone when coming out of the recession: PC shipments were strong and enterprise spending has been on the up, while the average consumer frothed at the mouth as the bigwigs handed them shiny new toys for big bucks such as smartphones

The growth rate shows the dire state of world economics in the IT sector over 2009 but the increase in sales represents pent-up demand for hardware upgrades, says IDC.

With regards to growth, China and Russia will be leading the way with 21 percent and 17 percent respectively. Other emerging markets like Brazil and India will grow 14 percent and 13 percent respectively. The US will reach record IT market growth of five percent this year, up from the four percent plunge in 2009. Despite Eurozone woes Western Europe will still post IT spending growth of three percent in constant currency. Japan should grow about 0.5 percent. 

It’s all quite polarising. While companies and consumers have had the dosh this year to invest in kit and that “pent up” buying, it’s wise not to throw caution to the wind. The global economy appears to have U-turned, but there’s uncertainty short and long term particularly with the debt crisis facing Western Europe.

A double dip recession could really screw things up after a positive year, meaning 2011 could see a slink in spending and decline, not growth, again as with 2009. IDC says a double-dip would be more likely to lead to flat rates with less than one percent growth in case of a double dip, and recovery wouldn’t pick up as with 2010, but will be sluggish as mature economies struggle to recover – but emerging markets would again recover quickly. 

Stephen Minton, who looks at worldwide IT markets and strategies at IDC, said in a statement: “On the one hand, the very real pent-up demand for new IT investment, which has driven the solid recovery in the first half of 2010 and which will hopefully continue into 2011. 

“On the other hand, the potential loss of confidence in a global economy which remains extremely vulnerable to any further escalation of the European debt crisis or a deterioration in the U.S. stock market. 

“The next three months will be crucial to determining which of these scenarios is more likely; in the meantime, IT vendors should plan accordingly by understanding the potential impact on their near-term revenues.”