Spending on IT fell 13% in Egypt last year after the fall of former president Hosni Mubarak and will be flat for 2012 as a political void stalls government investment in the sector, IDC said on Sunday.

The research firm said Egypt`s IT spending will be $2.13 billion in 2012, the third-highest level in the Middle East behind Saudi Arabia`s projected $6.98 billion expenditure and the United Arab Emirates` $5.18 billion. The latter both have much smaller populations than the North African state.

Spending this year will be at 2011 levels, although down from a 2010 peak of $2.4 billion.

"There was a significant contraction in Egypt. We could potentially see a pick-up in the second half of 2012, but it all depends on the political situation," Jyoti Lalchandani, an IDC regional vice-president, told Reuters on the sidelines of a news conference.

"Despite any positive news on the political side, the market cannot recover in 2012, which will see almost flat IT spending. We`re down to the 2008, 2009 IT spending levels in Egypt."

The IT slump mirrors a wider malaise which has seen Egypt`s economy forecast to grow 1.8% in the year to 30 June.

That is far short of 6% -plus growth rate economists say Egypt needs to start creating enough jobs for its 80 million people, while tourist revenue and foreign investment has plunged following Mubarak`s exit and subsequent clashes against the ruling military council.

In Egypt, major IT spending has typically been in the government and financial services sectors which account for 40% of total expenditures, Lalchandani said.

"With the developments politically, there are no decision-makers making decisions on IT," he said. "As a result, the public sector spend on IT has reduced dramatically in the last couple of years.

"On the banking side, there`s a lot more caution given it has been a challenge attracting investments. With these two key sectors out of the way, there`s simply no way the Egyptian market can recover and come back."

Across the Middle East, about 20% of IT spending is consumer, with the remainder from the public and private sector.