South African consumer electronics market is expected to decline slightly after picking up strongly in the first half of the year, Fitch Solutions indicates.
The research firm expects the market to generate sales of US$5.5billion in 2021, growing to US$13.7billion by 2025. This amount, when compared with previous forecast, falls in the range of US$5.9billion to US$13.8billion over the same timeframe.
This forecast is based on latest release of trade data, while also taking into account the recent instances of social unrest and ongoing risks to the country’s economic rebound. According to the trade data, imports of consumer electronics products rose for the sixth consecutive month.
“We have slightly revised downwards our outlook for the South African consumer electronics market; sales will now grow from US$5.5billion to US$13.7billion over the 2021-2025 period.
“This is to account for recent instances of social unrest and ongoing risks to the country’s economic rebound including rolling electricity blackouts and waning investor confidence.”
Fitch Solutions
As such, this shows an improvement from the 2020 outlook. The outlook saw spending on products decline as the pandemic impacted the economy. The highest spending on imports was in the communications and PC hardware categories.
According to Fitch Solutions, the Video, Audio and Gaming segment will grow from US$989million in 2021 to less than US$2billion in 2025.
In the Computers segment, desktop sales suffered the most in 2020 due to the Covid-19 shocks but there was upside from enterprise investments into remote working that supported notebook sales.
Medium Term outlook of SA’s electronics market
Looking forward, there are also areas of the South African market which provide growth opportunities for vendors, including SMEs that are modernizing, and are hoping to boost demand for PCs and hardware.
However, this is dependent on conducive economic conditions, Fitch Solutions suggests. Current forecasts envision the computer segment accounting for 28.1 percent of total consumer electronics spending by 2025.
Also, from 2021-2025, consumer mobile upgrades, as well as some prospects for uptake from first-time buyers, will continue to drive the handset market.
Accordingly, vendors will adopt a dual-pronged approach targeting both groups, owing to much stronger competition in the low-cost smartphone market.
Meanwhile, higher income South Africans who are well informed about technological trends and have stronger demand for premium devices will drive demand for such products.
Upside and Downside risks to forecast
Furthermore, on the upside, this will be boosted by nationwide deployments of 5G technology, with both MTN and Vodacom having launched mobile 5G services in 2020. Fitch Solutions forecasts the market providing support to 7.2 million 5G customers by 2025. Based on these, the smartphone segment will remain the largest segment over the period under review, Fitch Solutions asserts.
Similarly, the electronic market benefits from a large footprint of retailers as electronics and appliance specialist retailers remain the primary channels for consumer electronics purchases. This is due mainly to the specialist nature of such retail outlets, their related expertise and wide product ranges.
On the downside, Fitch Solutions notes broader risks for the economy as the country’s risk of social unrest is likely to remain elevated. This will further pose long term risks for the country’s economic recovery, Fitch Solutions predicts.
According to the research firm, this will further exacerbate as a result of known factors such as rolling electricity blackouts, waning investor confidence. Also, the slow-downs in vaccine take up ahead of the country’s fourth wave of Covid-19 expected at the end of 2021 presents headwinds to the forecast.
READ ALSO: GOG, North Rhine-Westphalia strengthens co-operation in seven (7) sectors
