Economic Recovery to Drive IT Market Rebound in 2002, IDC Says
FRAMINGHAM, MA, May 1, 2002 – The global IT market has hit bottom and is poised for recovery in 2002, according to IDC. The rebound is attributed to strengthening economic conditions in the United States. However, IDC warns that IT spending growth will remain muted by historical standards before staging a full recovery in 2003. Worldwide IT spending growth, which was flat in 2001, is projected to rise to 4.7% in 2002 and to 9.6% in 2003.
“The ingredients for a technology rebound are falling into place,” said Kevin White, research manager of IDC’s Global IT Economic Outlook program. “Recent data releases point to a faster-than-expected recovery in the United States economy. As business conditions firm we expect to see companies re-launch IT projects that were deferred in 2001.”
IDC predicts a significant improvement in the United States IT market over the next two years. IT spending in the United States is forecast to rise by 3.7% in 2002, reversing the 3.5% contraction witnessed in 2001. Growth is forecast to rise to 8.8% in 2003 as the economic expansion gathers momentum.
IT growth trend in the regions:
Outside North America, IDC predicts that IT markets will remain broadly stable in 2002;
Western Europe - IT spending is forecast to rise by 6.2%:
Asia/Pacific – IT spending is expected to increase by 4.7% in 2002;
The European and Asian economies did not fall as sharply as North America’s in 2001, and neither did their IT markets. By the same token, these economies are not expected to rebound as quickly, despite positive spillovers from the United States. Global IT spending patterns will continue to reflect regional economic dynamics.
“Businesses recognize the potential for IT to reduce costs, expand revenue, and improve the bottom-line. But in the short-term, making these investments require funds that are often in short supply during a downturn. As the economy gathers steam and corporate profits improve, businesses will have the resources to invest in IT.” White added. “Historically, there is a strong correlation between corporate profits and technology investment.”
Although the speed and intensity of the recovery will vary from region to region, IDC predicts robust growth in worldwide IT spending in 2003 and beyond. Although negative cash flows constrained technology investment over the past year, this was only a temporary phenomenon. The fundamentals underpinning IT demand are strong. New technologies, rising Internet usage, and the proven benefits of technology investment for business productivity will continue to drive healthy growth in IT expenditures for years to come.”
For more information, please contact Amie White at 508-935-4653 or awhite@idc.com.
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