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Gartner cuts IT spending forecast on dollar weakness

Technology market research firm Gartner has cut its forecast for IT spending this year from 3.7% to 2.5% due to a weaker dollar. Worldwide IT spending this year will be $3.7 trillion.

It said the lower growth rate has more to do with the U.S. currency than an actual decline in spending and forecast a pick-up in spending in constant U.S dollars.

“The recent strengthening in the value of the U.S. dollar versus other currencies has resulted in the reduced growth rate. However, when looking at spending in constant U.S. dollars, Gartner analysts said IT spending is on pace to increase 5.2 percent in 2012, up from its previous projection of 4.6 percent,” the firm said.

“Despite ongoing concerns about the global economic recovery — most notably around the resolution of eurozone sovereign-debt problems, worries about the potential for China’s real estate ‘bubble’ to spillover and affect the rest of the economy and rising oil prices — early signs in 2012 suggest that the global economic outlook has brightened a little,” said Richard Gordon, research vice president at Gartner.

The worldwide telecom equipment market is forecast to show the strongest growth with spending reaching $472 billion in 2012, a 6.9 percent increase from 2011. Gartner attributes this growth to the continued health of the mobile devices market as well as a more positive outlook for enterprise network equipment, which is being driven by spending on application acceleration equipment, network security, WLAN and Ethernet switches.

It predicted that Government spending on IT will contract moderately on a global basis in 2012 and 2013, driven by austerity measures in the eurozone.

“While there has been much commentary about the need for government cuts since the sovereign debt crisis emerged in Europe, it is only now that the impact of government budget cutbacks is being felt on IT spending in the region. Similarly, we expect U.S. government spending to be essentially flat in 2012 before contracting in 2013,” the agency said.

In the small and midsize business market, which represents approximately a quarter of all enterprise IT spending, spending is forecast to reach $874 billion in 2012 and will grow to $1 trillion by 2016. Throughout the forecast period, midsized business IT spending outperforms other sectors in each of the next five years, driven by growth in spending on enterprise software, it added.

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