HERTFORDSHIRE, UK – The global consumer electronics market will see a full-year decline of 2-5% in retail value terms, while in the long-term, consumer electronics vendors will look to diversify their supply chains, according to Futuresource Consulting.

Efforts to halt the spread of the health crisis caused by the outbreak of COVID-19, which has infected almost 100,000 people across 80 countries so far, have caused significant disruption to global supply chains, says Futuresource.

Having already faced disruption in 2019 due to the Sino-American trade war, COVID-19 has further highlighted the risks associated with over-reliance on Chinese manufacturing. Given the Chinese consumer electronics market accounted for 22% of the $1 trillion industry in 2019, any demand side-shocks will hurt vendors’ revenues. Constrained supply will further affect the global market, inhibiting global distribution and the ability for vendors to compensate for lost Chinese revenue in other markets.

While there remains a range of unknown variables around the virus, short and long-term effects on consumer electronics and media entertainment industries will be significant, says the research firm.

Supply chain disruption to hardware vendors reliant on Chinese manufacturing will struggle, with delays in the supply chain leading to product delivery difficulties. They are likely to report poor first quarter performance as a result, a problem that may extend into the second quarter. Futuresource does, however, expect the second half of 2020 to somewhat, if not completely, compensate for the difficulties experienced in the first two quarters, with pent-up demand meaning consumption patterns will see a shift in seasonality, as opposed to an overall yearly decline.

In contrast, digital media platforms are benefiting from the crisis, with digital video, music, and gaming all seeing spikes in engagement. Retail trends toward ecommerce are also accelerating, while collaboration technology and software are also a beneficiary of the crisis. Besides being a short-term effect, this could have implications in the long run, as consumers are likely to continue engaging with these platforms after the virus is contained, according to Futuresource.

With 2020 GDP growth now estimated by the Chinese Bureau of National Statistics at 5% year-over-year, China’s economic performance could create wider uncertainty in a global economy that is still recovering from the range of headwinds it experienced in 2019, including the Sino-American trade war, Britain’s exit from the European Union, and a wide-ranging slowdown in developed economies. Global stock markets have experienced significant volatility as a result of the spread of COVID-19 into Europe. The Dow Jones and S&P 500 in the US posted their most dramatic daily declines since 2018, while the UK’s FTSE 100 saw its sharpest contraction since January 2016. Conversely, the price of gold – a commodity widely viewed as a safe investment when the global economy is in a period of uncertainty – reached a seven-year high.

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