The Sars outbreak will have a significant impact on information technology spending in Hong Kong, according to research firm International Data Corp (IDC). As a result of Sars, IDC has revised its forecast for IT spending in the territory this year from 0.8 per cent growth to a 2 per cent fall. IDC estimated the market would reach US$2.46 billion by the end of the year, compared with US$2.52 billion last year. It said IT spending in China would increase 9.2 per cent from US$22.31 billion to $24.37 billion, revised from $24.9 billion. Meanwhile the Taiwan market was expected to reach US$4.79 billion this year, up 3.9 per cent. '[The IT industry] has had to ride through a number of setbacks in recent years, including the Asian currency crisis in 1997-98, the effects of recession in the US and the fallout after September 11, and now the Sars outbreak,' Kitty Fok, vice-president of IDC's central research group for Asia-Pacific region, said. 'We predict that the IT industry will be inventive in its response to this latest challenge.' The research house forecast IT spending in Asia-Pacific, excluding Japan, would reach US$76.08 billion by December, compared with its previous forecast of $77.14 billion. The region had IT expenditure of $71.68 billion last year. Ms Fok expected the personal computer market to be one of the worst hit in Sars-infected countries. She said the forecast for China was based on the assumption the outbreak would continue to be severe in Beijing and provinces such as Shanxi until the next quarter. 'IT demand is growing in China's second, third and fourth-tier cities, so the Beijing region, whilst important, is far from being the dominant part of demand for IT nowadays,' Ms Fok said. 'Nevertheless, as Beijing has a significant influence in many purchase decisions, the Sars outbreak there is being felt by the IT industry throughout the country and particularly in the government and education sectors.' IDC recently cut its forecast for mainland PC sales in the second and third quarters as Sars kept people away from the shops. It said it had yet to determine the exact impact on business but PC sales were likely to fall sharply. Its original forecast for the China market in the third quarter was for 20 per cent year-on-year growth. 'We do see demand in China but expect a purchasing delay of four to six weeks,' Ms Fok said. 'Education and government projects are still there, but there has been a slowdown in installation in Beijing and other affected cities. The demand in western China is still strong.' She said the Sars outbreak would also affect the 'clone' market, the generic non-branded PCs assembled by small firms.