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IT spending seen dropping $140 billion

A decline in economic growth across the world could wipe out more than $140 billion in information technology spending over the next three years, a new report says.

A decline in economic growth across the world could wipe out more than $140 billion in information technology spending over the next three years, according to a new report.

Research group IDC warned on Monday that poor economic conditions would have a severe effect on spending on new technology. In particular, IDC is concerned that there could be a more severe downturn in Western Europe.

The company said that a worst-case scenario projection could be a global slowdown that would "reduce worldwide IT spending between 2001 and 2003 by as much as $150 billion, with $50 billion less demand from Europe."

IDC's worst-case projection would mean that IT spending in Europe would rise by only 7.9 percent in 2001. The research group actually expects to see growth of around 11 percent this year, more optimistic than some experts predict.

"Software and services are still expected to show strong growth this year," said Stephen Minton, manager of IDC's Global IT Economic Outlook research program. Minton warned that hardware sales would be most badly hit if economic conditions were worse than expected.

While many tech firms claim publicly that economic conditions will soon improve, many experts are less confident. Last month's Holway Report predicted that demand for IT products would remain modest until at least 2004. Richard Holway, director of Ovum--the analyst firm that publishes the Holway Report--said IT spending would stay low because there was no exciting new technology that would boost demand on the horizon.

Staff writer Graeme Wearden reported from London.