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Global IT spending growth expected to be hit by COVID-19

There is a possibility that "things could get worse" depending on the coronavirus crisis continuing

The ongoing coronavirus (COVID-19) crisis is set to negatively impact IT market growth over the year with a forecast adjustment of just over 4 per cent, year-on-year, but could drop to 1 per cent in a "pessimistic scenario" by the end of the year.

Global IT spending in 2020 is expected to grow by 4.3 per cent, compared to the prior year, in constant currency terms, according to research from the International Data Corporation’s (IDC) Worldwide Black Book: Live Edition.

This forecast is a decline from the 5 per cent growth predicted in January and  factors in updated hardware device sales forecasts. 

By March, this forecast could drop down to 3 per cent, down from the original forecast of 4 per cent. In the Black Book's “pessimistic” scenario, IT spending  could grow by just 1 per cent by the end of 2020.

Stephen Minton, vice president of IDC’s Customer Insights & Analysis group, said that the current situation is “extremely fluid.”

“Our monthly data and surveys are clearly pointing in one direction, but it's still early to understand the full impact of the coronavirus crisis across all sectors of the economy,” Minton said.

“We are using scenario models to illustrate that forecasts have a wider range than usual, and the downside risks in those models seem to be increasing every day.

“But the duration of the crisis remains a big unknown and will go a long way in determining overall market growth for the year as a whole."

The pessimistic scenario, Minton added, is not the worst-case scenario.

"Things are moving so quickly that we need to constantly recalibrate our assumptions and expectations, but the pessimistic scenario reflects an IT market in which weaker economic growth translates into weaker business and consumer spending across all technologies over the next few quarters,” he said.

“Things could get worse, but hopefully not."

Previously, growth was expected due to the fourth quarter’s strong PC scales giving way to a 5G-driven smartphone upgrade cycle, a recovery for service provider spending on infrastructure and digital transformation projects driving demand for software and IT services.