Corporate technology spending is poised to exceed industry projections this year, as the global economy’s recovery spurs investment.
Worldwide expenditures will increase 4.2 percent to $3.7 trillion in 2013, outpacing last year’s 1.2 percent growth rate, based on a forecast from Gartner Inc., an industry researcher. This broad measure — which includes hardware, software and services — may underestimate spending, which could expand as much as 5 percent, according to estimates by Rich Kugele, an analyst in Boston at Needham & Co. who has monitored the industry since 1998.
Companies began “under-spending” in May, which lasted through December as “the world became skittish,” Kugele said. With a partial resolution to the so-called fiscal cliff in the U.S. and amid signs of economic re-acceleration in China and stabilization in Europe, the negativity that’s dragged down the industry is starting to lift because “there’s a limit to how long companies can hold back spending on technology that drives the global economy.”
U.S. gross domestic product will expand 2 percent this year, the euro area economy will shrink 0.1 percent after contracting 0.4 percent in 2012 and China’s GDP will accelerate 8.1 percent, based on the median forecasts of economists surveyed by Bloomberg. The U.S. economy grew an estimated 2.3 percent last year, while China’s rose 7.8 percent.