Forrester, IDC Cut Tech Outlook on Recession Risk

By Reuters -  |  Posted 2008-02-11 Print this article Print

Technology research firm Forrester Research has cut its forecast for 2008 global technology purchasing growth by a third, citing the risk of a U.S. recession.

SAN FRANCISCO (Reuters) - Technology research firm Forrester Research Inc has cut its forecast for 2008 global technology purchasing growth by a third, citing the risk of a U.S. recession.

Forrester said it now expects global technology purchases to grow 6 percent in dollar terms this year, down from an earlier projection of 9 percent. It expects U.S. purchases of technology goods and services to grow 2.8 percent, down from a previous forecast of 4.6 percent.

The revisions assume a mild recession in the United States in the first two to three quarters of 2008, Forrester said on Sunday. The United States accounts for about a third of global technology purchases.

"While it is by no means certain that the U.S. economy will in fact experience a recession, the risks of one are high enough to justify a more conservative outlook", Forrester Vice President Andrew Bartels said in a statement.

IDC, another leading research firm, also lowered its global outlook, citing similar concerns. It said on Monday that it now expects worldwide IT market growth of 5 percent this year, down from its previous forecast of 5.5 percent and off from 2007's 6 percent.

"While there is still debate over the severity and length of a U.S. economic slowdown, we do know that the IT market will not escape unscathed from any significant downturn," said Stephen Minton, vice president of Worldwide IT Markets at IDC.

Forrester's 2008 projections compare with 2007 global technology buying growth of 12 percent and U.S. expansion of 6.2 percent. Forrester estimates the global market for technology purchases to be $1.7 trillion in 2008.

It expects technology purchasing to slow in all regions, with Asia-Pacific growing 9 percent in dollar terms, down from 15 percent last year, and Western and Central Europe climbing 5 percent, compared with last year's 15 percent, which was largely fueled by the dollar's drop against the euro.

Forrester defines technology purchases as business and government investments in computer and communications equipment and software plus the value of technology and consulting services bought by companies and governments.

Within technology, software investment will likely do better than the average, growing 8 percent globally in 2008 but still down from 11 percent last year, Forrester said.

Technology outsourcing should also grow by an above-average 9 percent, but purchases of personal computers, servers, data storage equipment and computer peripheral devices will slow to 4 percent growth from 12 percent in 2007, Forrester said.

It expects global communications equipment purchases to grow by 3 percent in 2008, compared with 12 percent last year.

(Reporting by Philipp Gollner; additional reporting by Franklin Paul in New York; editing by John Wallace)

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