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Forrester remains positive despite Euro fears

IT spending in central and western Europe is feeling the effect of the debt crisis and a weaker euro, but Forrester research still believes the overall picture is good.

Euro symbol

Forrester Research's latest quarterly report has taken a positive slant on the prospects for the IT market for the rest of 2010 despite having to revise its forecast for Europe downwards due to continued fears over the recent debt crisis.

Globally, spending on IT goods and services is expected to total $1.58 trillion in 2010, a growth of 7.8 per cent and slightly stronger than the 7.7 per cent Forrester forecast in April.

But while spending forecasts for the US and elsewhere have improved since then, Forrester's outlook for Europe has weakened. The research firm is now predicting a slight negative growth of -0.7 per cent in central and western Europe (based on the dollar) as the combination of the Greek debt crisis and a weaker euro take effect.

"We continue to expect that the tech recovery will gain strength in the US and around the world, though European IT market growth will be lower than our earlier predictions," the report reads.

However, Forrester vice president and principal analyst Andrew Bartels, who authored the report, remains positive despite having had to revise his predictions of three months ago.

"Expectations about economic growth prospects and the resulting implications for tech markets have been gyrating wildly in 2010," Bartels wrote in a blog post accompanying the report. "[But] where there have been surprises, they have been more often positive than negative," it added.

"Economic recoveries seldom move in a straight line, so I did not expect to see an unbroken string of good news."

For other markets, however, the news is almost entirely good. US growth is pegged at 9.9 per cent for the year 1.5 per cent up on April's outlook while Canada is expected to show the biggest growth of all (16.2 per cent), followed by Latin America (15.4 per cent). Even the rest of Europe, the Middle East and Africa (EMEA) is set for double-digit growth once central and western Europe are removed from the equation.

Accordsing to Forrester, computer equipment and software will be the strongest categories in particular, PCs, peripherals, and storage equipment for the former and operating system software and applications for the latter.

As other recent forecasts have predicted, growth in IT services is expected to be be modest, with systems integration projects waiting for licensed software purchases to rise.

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