Technology research firm IDC adjusted its predictions for technology spending world wide, saying that "continued economic and geopolitical uncertainties" reduced the expected growth rate from 3.7 percent to 2.3 percent for this year compared with spending figures for last year.
IDC on Thursday said it expects spending on IT to reach US$852 billion with 1.5 percent growth in the US and 2 percent in Europe, while Japan will see a 1.4 percent decline.
According to a company statement, economic and geopolitical uncertainty has had a significant, negative impact on IT spending since the fourth quarter of last year.
With worldwide GDP growth in steady decline and US corporate profits facing the most severe downturn since the Great Depression, the gradual recovery that was slowly emerging from the accounting scandals and terrorism of the previous 18 months has stalled.
"The outlook for the next six months continues to be extremely volatile and a double-dip IT recession can't be ruled out in a worst-case scenario. But the fundamental drivers remain solid," said Stephen Minton, director of IDC's Worldwide IT Markets group.
"Once the fog of war has cleared, there will be a gradual recovery in corporate profits and business confidence, and this will translate into increased IT spending. We expect to see improved market conditions in every region next year. And by 2006, the global IT market will generate US$1 trillion in revenues," he said.
The company said that IT spending will recover next year to 4 percent to 6 percent growth, but that without some "paradigm shift," growth rates would never recover to the double digit levels that preceded the current downturn. The primary drivers behind the recovery include mobile computing, large software packages, outsourcing and new purchases of hardware.
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