Economic woes see IDC lower worldwide IT spending forecast for fifth consecutive month
Things aren't getting better, unfortunatelyBy Rob Thubron
In brief: The International Data Corporation (IDC) has, for the fifth consecutive month, lowered its 2023 forecast for worldwide IT spending. The move comes as the economy continues to feel the repercussions of rising inflation, high interest rates, low consumer confidence, and job losses.
IDC's new monthly forecast for worldwide IT spending growth has been downgraded to 4.4% at $3.25 trillion. That's down from the previous month's forecast of 4.5% and a significant decline from the 6% growth IDC predicted back in October 2022.
"Since the fourth quarter of last year, we have seen clear and measurable signs of a moderate pullback in some areas of IT spending," said Stephen Minton, vice president of IDC's Data & Analytics research group. "Tech spending remains resilient compared to historical economic downturns and other types of business spending, but rising interest rates are now impacting capital spending."
IDC has scaled back expectations for some additional hardware categories, including servers, wearable devices, and peripherals, since last month. It has also reduced forecasts for on-premise infrastructure investments by enterprise buyers, though one area that has weathered the storm is cloud and service provider deployments.
"The most significant impact remains concentrated in consumer markets, with consumer IT spending now forecast to decline by 2% this year," said Minton. "This will be a second consecutive year of declining consumer tech spending, a huge change in fortunes from consumer growth of 18% in 2021. On the other hand, enterprise demand for cloud and digital transformation remains strong despite economic headwinds."
IDC's s Worldwide Black Book forecast, its monthly analysis of the status and projected growth of the worldwide ICT industry in 86 geographies, shows direct IT spending is expected to grow by 6.4% overall in 2023, but indirect spending through channel providers will increase by just 2.5% as credit tightening affects smaller businesses and consumers.
Business and consumer spending on technology has crashed since the start of last year. The PC gaming industry had a great 2021, with revenue growing 25% to more than $5.74 billion. But the economy took a turn for the worse in 2022, prompted by Russia's invasion of Ukraine. The PC and tablet market, gaming monitors, Chromebooks, desktop graphics cards, hard drives, motherboards, and even smartphones experienced a sharp decline in YoY sales last year - some PC manufacturers had to cut prices as a result.
With many companies slashing jobs due to their overhiring during the pandemic, people wary of making large purchases when essentials like food and utilities are getting more expensive, and IDC's pessimistic predictions, the near-term economic outlook isn't looking rosy.
Image credit: Santeri Viinamäki