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IDC lowers global IT spending outlook

The war with Iraq and continuing economic uncertainty were behind the market research firm's lowered forecast for 2003.

Market research firm IDC lowered its 2003 forecast for worldwide technology spending Thursday, citing the war with Iraq and continuing economic uncertainty.

Information technology spending is expected to rise 2.3 percent to $852 billion this year, according to IDC's Worldwide Black Book. That figure is down from the research firm's previous projections of 3.7 percent growth.

"The outlook for the next six months continues to be extremely volatile, and a double-dip IT recession can't be ruled out in a worst-case scenario. But the fundamental drivers remain solid," said Stephen Minton, IDC's Worldwide IT Markets group director, in a statement.

But IDC's forecast still leaves a glimmer of hope for the struggling IT market. It notes while hardware spending is expected to post a slight decline of 0.5 percent this year, the software sector is likely to grow 4.5 percent and services 3.7 percent.

Regions throughout the world will also post varying degrees of growth. Europe is expected to fare the best with 2 percent growth, followed by the United States with 1.5 percent and Japan with 1.4 percent.

IDC anticipates a recovery will begin next year, with packaged software, outsourcing and wireless-related hardware and software serving as growth drivers.

"We expect to see improved market conditions in every region in 2004. And by 2006, the global IT market will generate $1 trillion in revenues," Minton said.

IDC is anticipating IT spending to grow 4 to 6 percent next year and the industry to encounter growth rates of 6 to 7 percent over the next three to five years.

But Minton reiterated what most industry watchers and players have come to expect in the years ahead. "We will not return to the double-digit growth rates which preceded the downturn. Those days have gone, at least until the next paradigm shift or speculative bubble."