Forrester, IDC Cut Tech Outlook on Recession Risk

SAN FRANCISCO (Reuters) – Technology research firm ForresterResearch Inc has cut its forecast for 2008 global technology purchasinggrowth by a third, citing the risk of a U.S. recession.

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

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

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

IDC, another leading research firm, also lowered its global outlook,citing similar concerns. It said on Monday that it now expectsworldwide IT market growth of 5 percent this year, down from itsprevious 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 escapeunscathed from any significant downturn," said Stephen Minton, vicepresident of Worldwide IT Markets at IDC.

Forrester’s 2008 projections compare with 2007 global technologybuying 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, withAsia-Pacific growing 9 percent in dollar terms, down from 15 percentlast year, and Western and Central Europe climbing 5 percent, comparedwith last year’s 15 percent, which was largely fueled by the dollar’sdrop against the euro.

Forrester defines technology purchases as business and governmentinvestments in computer and communications equipment and software plusthe value of technology and consulting services bought by companies andgovernments.

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

Technology outsourcing should also grow by an above-average 9percent, but purchases of personal computers, servers, data storageequipment and computer peripheral devices will slow to 4 percent growthfrom 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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