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Global Tech Spending To Fall

Global IT vendors' revenue will drop by 3% in 2009, ending a seven-year period of growth, according to a new report.

Forrester Research said Tuesday that worldwide purchases of IT goods and services would drop to $1.66 trillion this year. Last year, they rose by 8%, in part because of the decline in the U.S. dollar. This year, a stronger U.S. dollar will weigh the industry down, according to Forrester.

Recessions in the United States and other industrialized countries also will drag down sales, with the weakest growth areas in Western and Central Europe (1.3%), and Canada and Latin America (1.2%), according to the Forrester report.

The technology market in the United States will fare slightly better, with 1.6% growth, but it will lag behind the Asia-Pacific region, Eastern Europe, the Middle East, and Africa. There, growth rates will range from 3.1% to 5.4%, Forrester predicted.

The predictions mark the first time that global IT goods and services are expected to decline since they fell by 6% in 2001 and 2002.

IT vendors' revenue will likely recover in 2010, with 9% growth in U.S. dollars and 6% in local currencies, but the beginning of that year will be challenging, Forrester said.

However, Forrester cautioned that its predictions are based on the assumption that the recession in the United States and other major economies will begin recovering during the last two quarters of 2009 and that the U.S. dollar will lose some of its strength without returning to 2008 lows.

"If the recession lasts into 2010 and becomes markedly deeper than present forecasts, the weaker-than-expected economic growth will cause tech purchases in local currencies to drop by 3% or more," Forrester authors and analysts Andrew Bartels, Ellen Daley, and Madiha Ashour wrote.

If the dollar drops back to an exchange rate of $1.50 per euro, the results will shift from significant losses to small losses or slight growth, Forrester said.