How Will the Global Economic Slowdowns Affect the Asian Consumer Tech Market?
The outlook for consumer tech demand remains impaired year to date, with the Russia-Ukraine conflict continuing, China demand remaining sluggish following the lockdown and disruptions, and inflation pressuring consumer demand and triggering faster rate hikes by central banks.
Our economics team revised its 2022 global GDP growth estimate in June for the second time this year. High inflation is eroding real incomes and driving aggressive central bank policy, hurting consumer and business confidence.
Higher inflation and a strong USD affect the emerging market consumer demand for connected home devices, smartphones, and PC/tablets. A deeper slowdown would also pressure the higher-end consumer demand and impact IT budgets.
The shift in spend shows US actual personal goods consumption peaking in early 2021 and gradually returning to the expected trend. China could continue to see sluggish retail sales following COVID lockdowns. Core goods inflation has fallen as inventory levels rise and supply grows more abundant. Still, housing, services, and commodity prices keep inflation above the target, straining consumer cashflows. The share of disposable income spent on non-discretionary items—food, energy, debt service, and rent—has broken a decade-long downtrend, putting pressure on the average consumer.
Full-year units are held back by sluggish consumer demand, macro uncertainties, and evolutionary upgrades. For 2023, we expect a modest unit recovery from the lower base, reflecting stabilizing replacement rates from fewer COVID restrictions and easing supply and cost pressures. On a brighter note, relaxing pandemic-related travel constraints could enable more engineering collaboration leading to more feature upgrades across smartphones and other consumer products as the focus shifts from resolving supply challenges to designing in new innovations to stimulate demand.
