Global economic outlook brightens, gov't IT spending contracts

The global economic outlook has brightened up slightly as world wide IT spending in government sector contracts moderately.

"Despite ongoing concerns about the global economic recovery — most notably around the resolution of eurozone sovereign-debt problems, worries about the potential for China's real estate 'bubble' to spillover and affect the rest of the economy and rising oil prices — early signs in 2012 suggest that the global economic outlook has brightened a little," said Richard Gordon, research vice president at Gartner.

Also, Gartner analysts said IT spending in the government sector is expected to contract moderately on a global basis in 2012 and 2013, driven by austerity measures in the eurozone.

“While there has been much commentary about the need for government cuts since the sovereign debt crisis emerged in Europe, it is only now that the impact of government budget cutbacks is being felt on IT spending in the region,” they said. “Similarly, we expect U.S. government spending to be essentially flat in 2012 before contracting in 2013.”

Gartner said worldwide IT spending figures is forecast to total $3.7 trillion in 2012, a 2.5 % increase from 2011. But is down from the previous forecast of 3.7% growth for 2012. The recent strengthening in the value of the US dollar versus other currencies has resulted in the reduced growth rate. However, when looking at spending in constant US dollars, IT spending is on pace to increase 5.2% in 2012, up from its previous projection of 4.6%,

In the small and midsize business market, which represents approximately a quarter of all enterprise IT spending, spending is forecast to reach $874 billion in 2012 and will grow to $ 1 trillion by 2016. Throughout the forecast period, midsized business IT spending outperforms other sectors in each of the next five years, driven by growth in spending on enterprise software.

The worldwide telecom equipment market is forecast to show the strongest growth with spending reaching $ 472 billion in 2012, a 6.9% increase from 2011. Gartner attributes this growth to the continued health of the mobile devices market as well as a more positive outlook for enterprise network equipment, which is being driven by spending on application acceleration equipment, network security, WLAN and Ethernet switches.