Last year marked the nadir of the downturn with IT spending falling about three percent. Worldwide IT spending is expected to be about flat in 2003, according to IDC (Framingham, Mass.).

"Generally we expect some moderate pick-up in IT spending starting later this year and gaining momentum in 2004. Things are getting better," said Steve Minton, an IDC research director. "The question is not whether there will be a recovery but how soon and how fast," he added.

Long term, IDC expects IT spending will hover a few percentage points above overall economic growth measured by the gross domestic product in individual countries or about seven percent worldwide. "I think the consolidation environment we are in will continue because we are in an industry growing at about half the rate it was used to in the last several years," Minton said.

The IDC forecast is tied to a number of assumptions about overall economic growth, especially corporate profits that historically are closely tied to IT spending.

IDC cited a number of positive and negative economic factors affecting IT spending. Corporate profits and the stock market are generally rising while interest rates and oil prices have fallen. But chief executives remain cautious, and report declining optimism about 2003 in recent IDC surveys.

The IT recovery will come unevenly. IDC projects Canada and Western Europe will still see declines in IT spending this year, while Asia/Pacific, the Middle East, Africa and Central and Eastern Europe could see growth rates of eight to 13 percent over the next two years.

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