A new scenario analysis by Strategy Analytics suggests that the 2020 recession triggered by COVID-19 will disrupt global automotive, consumer electronics, semiconductor and IT infrastructure businesses before recovering in 2021.

The new scenario suggests that disruption from the worst economic cycle since the Great Depression will cause real GDP in major industrial economies to plunge by more than 7% (33% annual rate) in the second quarter, with losses for consumers and B2B businesses.

Harvey Cohen, president of Strategy Analytics and lead analyst for the scenario analysis, said, “Our entire supply chain of digital products in our homes, our cars, and our mobile lifestyles will suffer significant damage during this economic downturn, which is likely to take place over the next three years. It is gradually manifested globally over four quarters. Real GDP is expected to decline by 3% (12% y/y) in the third quarter, with growth not seen until the second quarter of 2021.”

Ian Riches, vice president of Strategy Analytics’ automotive practice, said: “Global car sales and consequent demand for automotive electronics have plummeted since March, and are likely to fall by 25% in 2020 compared to 2019.”

David Kerr, Senior Vice President, Wireless and Broadband Research Service at Strategy Analytics, said: “Global smartphone sales will decline by 23% in 2020 before a modest recovery in 2021. Due to service delays in Europe and consumers in North America and China, Reduced demand for 5G equipment will have a huge impact on 5G adoption. China’s supply chain has recovered, but consumers’ willingness to update 5G equipment and services is uncertain. A relative bright spot is network services. Increase demand for broadband, although this will have little impact on operator earnings in the short term.”

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