Further weakening in the European economy could have a major impact on the demand for IT products and services over the next three years, according to IDC.
The worsening outlook for the Western European economy suggests that the tech slump currently impacting on the US market may spread to Europe. Globally, IDC forecast that IT spending between 2001 and 2003 could fall by as much as $150 billion, based on a “worst-case scenario” projection with a drop of $50 billion coming from Europe.
oftware and services are still expected to show strong growth this year,” said Stephen Minton, manager of IDC’s Global IT Economic Outlook research program and the European IT Markets Center. “Similar to the story in North America, we expect that any economic slowdown would have its most severe impact on hardware demand. Historically, hardware spending is highly vulnerable to swings in the overall economy.”
Currently, IDC forecasts 11% growth for IT spending in Western Europe this year, worst-case scenario for Europe would see total IT spending grow by just 7.9%. However, this slowdown could potentially continue into 2002 and 2003 as the European economy struggles to maintain growth while controlling inflation. IDC forecasts the most at-risk countries to be Germany and Italy, with the UK expected to be more stable.
“For European suppliers, the importance of understanding the broad economic picture has never been more important. Events in the United States have dispelled the myth that technology spending is immune to an economic slowdown,” Minton said.
