Technology forecast to pull world from recession

IT spending could help bring the gathering recession to an end but it will take some time to do so an analyst has predicted.

Joseph Brusuelas, a director at Moody’s Economy.com., told the New York Times that he expected IT spending to be one of the key areas that would gro first as the economy recovers.

“We’re not going to have a consumer-led recovery,” he said.

Investment in IT infrastructure has been hit hard but as time progresses it will become increasingly vital for businesses to update systems and new technologies. At a time when spending is so low in all areas of investment IT is expected to be one of the first to recover.

However, the latest US government report into the economy shows that it is too early to expect any improvement in the short term.

The fourth quarter of the year saw the US gross domestic product shrank 6.2 per cent in the last quarter of the year, the fastest decline since 1982. The forecast rate had been for a fall of 3.8 per cent.

The situation was even worse in the IT sector. There investment in hardware and software dropped at an annualised rate of 28.8 per cent, compared to around 23 per cent for overall investment.

The government was not the only one to revise IT spending forecasts. Earlier today IDC announced it was its projection on IT spending from growth of 2.6 per cent to just 0.5 per cent.