Middle East IT spending forecast slashed, as cloud offers bright spot

Gartner reports that due to the coronavirus, spending on IT in the Middle East and North Africa will decline by 6 percent this year, in reversal of earlier expectations, as cash outlays on devices, IT services and data centres are cut.

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The coronavirus pandemic will force Middle East enterprises to hit the brakes on tech spending this year, though cloud initiatives will likely be a bright spot as CIOs look to save cash and make cuts primarily in expenditures on end-user hardware, on-premises data centre systems and IT services, according to Gartner.

Overall IT spending in the Middle East and North Africa (MENA) will decline 6.12 percent this year, to US$147.8 billion, according to the latest forecast from the market research firm. That's a big difference from the 2.4 percent growth Gartner predicted just a little over three months ago.

Still, it's not quite as bad as the 8 percent global decline in spending that Gartner is now forecasting. "People think IT spending is tied to GDP – it's not. It's about the mix of industries in a particular country or region," said John-David Lovelock, research vice president at Gartner.

The hardest hit industries globally -- such as entertainment, tourism, air transport and heavy industry -- will take over three years to come back to 2019 IT spending levels, Gartner predicts. Meanwhile, though the oil and gas industry – a big revenue driver in many MENA countries -- is taking a big hit due to an ongoing price war and a drastic drop in demand as global lockdowns reduce energy consumption, the Middle East can still at least produce oil more cheaply than it costs to sell it, Lovelock noted.

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