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IDC Downgrades Forecast for 2005 IT Spending

Market researchers at IDC downgraded their expectations for IT spending growth in 2005, although the first quarter of the year largely met the firm's expectations.

According to the IDC update Wednesday, businesses increased their technology budgets and started new projects on security, regulatory compliance, infrastructure management and business intelligence.

But worsening economic conditions in Europe caused firms to hold back on major IT purchases and Japanese spending was sluggish. IDC downgraded its IT spending expectations in 2005 for Western Europe from 5.6 percent to 4 percent. IT spending in Japan is now expected to increase by just 1 percent. The company's forecast for the United States is now 5 percent growth, down from earlier estimates of 5.8 percent growth.

A January IDC forecast on IT spending for 2005 had called for a U.S. outlay of $416 billion and a worldwide outlay of $965 billion. A statement describing the downgrade did not list IDC's new spending estimates for 2005, which are included in IDC's $15,000 pivot-table report titled, "Worldwide Black Book Query Tool, Version 1 2005."

"We remain focused on the downside of expectations for Q2 and the rest of the year, with interest rates, oil prices, and currency fluctuations all potential wild cards which could impact business confidence and investment." said Stephen Minton, vice president of Worldwide IT Markets at IDC.

Even at the beginning of the year, IDC had expected 2005 to be a more challenging period for IT spending growth than 2006-2009. IDC is holding to earlier forecasts of compound annual growth rates of 6 percent between 2006 and 2009.

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.

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