According to the president of the International Data Corporation, Crawford Del Prete, global information technology (IT), spending is predicted to experience a significant impact from a potential recession in the second half of 2023. While IT spending by businesses is expected to grow at an annual rate of up to 5.3% to reach $3.3 trillion in 2023, it could decline to approximately 3% in the event of a recession.
Del Prete has attributed this to inflation, which is likely to present a challenge to central banks such as the US Federal Reserve and the European Central Bank. He added that the ongoing war in Ukraine, as well as China’s shift from a zero-Covid policy to a more open one, could also affect demand, creating an inflationary environment that takes away potential dollars that companies would otherwise use to spend on other aspects such as goods, services, and energy.
Despite the challenges posed by macroeconomic and geopolitical factors, the role of digital transformation in driving economic and societal growth is widely recognized by enterprises and governments worldwide. However, the ability to spend more on innovation is hindered by these factors.
Del Prete noted that a recession in 2023 may not be severe, but it could still cause a deceleration in IT spending. Recently, the US Federal Reserve raised interest rates by 25 basis points, the eighth time since 2022, and indicated that there could be further increases as it strives to control the current high inflation levels.
