IDC and its Energy Insights division have revised their spending forecasts for IT and energy spending, revealing that the rapid collapse of the global banking system may mean it will be 2011 before these markets bounce back.
They have said the rapid collapse and subsequent bailout of the global banking system, and sudden instability of global stock markets, have created a radically different context for global economic growth than that of even two months ago.
In September, the forecast for real Eurozone GDP growth in 2009 was 0.9pc. By mid-October it had dropped to 0.5pc. Most recent reports, published on 8 December, dropped this forecast further to – 0.9pc.
“This sudden change of the macroeconomic picture necessitated a review of Energy Insights’ and IDC’s IT spending forecasts”, said Roberta Bigliani, EMEA research director with Energy Insights.
“Even though the utilities industry is historically very resilient, there will still be a significant slowdown in Western European utilities spending growth in 2009, as the financial crisis has pushed even further the necessity to become ever more efficient, which will lead to faster IT spending growth in the long term, from 2010 to 2012.”
Overall, utilities in Western Europe, especially in the continental area, are still in a good financial position, despite the general reduction in their market value, as seen in the various relevant indexes.
Despite the economic slowdown, utilities still appear not to have any major problems with liquidity and the ability to raise capital, as seen in the ongoing mergers and acquisitions (M&A) activities.
Nevertheless, the entire industry, and particularly pure energy retailers, will be pushed to reduce their costs, namely cost-to-serve, and increase their operational excellence.
The macro technology sector expected to be most harmed by the new revisions is the packaged software sector, which witnesses a drop of 4.4pc in 2009 growth. Nonetheless, the software sector is still expected to have the most elevated growth rate, while the hardware sector is now expected to contract by 2pc, rather than to grow by 1pc.
The two countries that will be most severely hit by the crisis are France and Germany, which are also the two biggest markets after the UK.
With regards to utilities sub-industries, Energy Insights forecasts that the slip in IT spending is similar across the various categories, with the electricity sector being more resilient than its gas and water counterparts.
In the new post-crisis data, Energy Insights highlights that the most significant drop is forecast for 2009, as the downward spiral induced by the financial crisis is expected to be overcome by 2010.
However, this rather sudden contraction of the IT spending market is expected to then provide a boost in the long term, hitting around 2011/2012.
By John Kennedy