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Europe IT spending set for 2011 growth

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A few weeks ago, the wizards at Gartner put out their prognostications for global IT spending for this year and next, and now they are rubbing their crystal balls to polish them to get a better sense of what will happen in particular markets in 2011. The good news is that IT budgets are expected to grow in EMEA after two years of declines. And not surprisingly, Asia/Pacific region, which missed a beat or two during the Great Recession, is expected to grow IT spending as the booms continue in China, India, and other countries in that part of the world.

As El Reg previously reported, Gartner reckons that IT spending is on track to hit $2.4 trillion in 2010, up 2.4 per cent compared to last year, with spending rising another 3.1 per cent in 2011 to kiss $2.5 trillion. Gartner warned that between 2010 and 2014, the IT racket would exhibit "timid and at times lackluster growth," with global IT expenditures reaching only $2.8 trillion by 2014.

Europe, the Middle East, and Africa, as a group, will be pulling down the global class average, but at least starting next year are going to be heading into positive territory for the first time in two years, by Gartner's math. Peter Sondergaard, senior vice president and global head of research at the IT analyst firm, said that IT spending (including hardware, software, services, and telecom) would fall by 2.1 per cent in 2010, to $784.8bn, but that with several key countries on the mend and despite woes in Greece, Ireland, Italy, Spain, and Portugal, the EMEA region will show a 1.3 per cent increase in 2011, hitting $795.2bn in sales.

Gartner is projecting that Western Europe will be hit the hardest in 2010, with IT revenues declining 3.3 per cent as measured in US dollars and will only have a compound annual growth rate of eight-tenths of a per cent from 2010 through 2014 inclusive.

The big culprit in the EMEA IT spending slump this year are local and national governments, which cut back spending by 2.8 per cent to $139.6bn (this includes all kinds of IT expenditures). IT services in EMEA will be hit even harder this year, declining by 5.6 per cent, to $234bn, but hardware spending was up 4.6 per cent to $79.4bn because companies can make good economic arguments to replace systems and networks that are three, four, or five years out of date.

IT spending in the Asia/Pacific region was actually down by 1.3 per cent in 2009, to $262.4bn, and is projected to rocket back up by 10.6 per cent to $290.2bn in 2010. Growth in the AP region is expected to cool a bit in 2011, rising only 7.6 per cent, to $312.6bn.

"Next year we see a slowing trend in Asian growth, but one that is unlikely to develop into something more problematic, and some countries, such as India and China, show no signs of slowing down," explained Sondergaard in a statement accompanying the projections. "After some impact of the global financial crisis in 2009, growth in manufacturing and supply chain industries in China and India has picked up again in 2010."

Australia, which did not have the same economic woes as the United States and Europe, took a 5.3 per cent IT spending hit in 2009 to $44.8bn. Like the AP region overall, Australia is expected to grow back through its 2008 decline, rising 10.8 per cent to $49.6bn in 2010, but cooling considerably more than its peers in China and India thereafter. Gartner expects IT spending in Australia to rise by only 2 per cent in 2011, hitting $50.6bn.

Gartner has not yet announced its breakdown of IT spending projections for North America or the United States, but did offer this gem: By 2012, the Gartner whitebeards expect that hardware spending across the Asia/Pacific region will be larger, in absolute dollars, than spending in North America. ®

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