Boston, MA -- (SBWIRE) -- 08/21/2012 -- BMI View: We project that Israeli consumer electronics spending will grow by about 3% in US dollar terms in 2012 to US$3.4bn, with our previous forecast being downwardly adjusted due a deteriorating economic outlook. In Q112, consumer spending continued to slow, after spending on durable goods such as PCs and TV sets showed signs of falling off in 2011. However, consumer spending should be supported by stimulatory fiscal spending, as well as falling unemployment and low inflation and interest rates. Across our five-year forecast period, a growing population and rising computer and internet penetration will support consumer electronics demand growth, along with new technologies and products such as tablets, smartphones, higher capability netbooks and 3D TV sets.
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Headline Expenditure Projections
- Computer hardware sales: US$2.48n in 2011 to US$2.49bn in 2012, +1% in US dollar terms. Forecast in US dollar terms downwardly revised due to macroeconomic factors, but Israeli businesses are investing more to facilitate expansion and development.
- AV sales: US$486mn in 2011 to US$515mn in 2012, +6% in US dollar terms. Forecast in US dollar terms unchanged, with flat-screen TV sets expected to provide the most dynamic development.
- Handset sales: US$348mn in 2011 to US$387mn in 2012, +11% in US dollar terms. Forecast in US dollar terms unchanged, with smartphones the main category driver and growth opportunity.
Israel's score was 57.2 out of 100.0, in third place in our latest MEA CE RRR table. BMI expects rising penetration of consumer electronics devices such as smartphones and flat-screen TV sets, but the external economic environment will constrain demand.
Key Trends & Developments
- The Israeli AV market will continue to be driven by the migration to digital broadcasting, which will fuel consumer upgrades to flatscreen TV sets. Israel is on course to become the first country in the Middle East and North Africa region to reach 100% household digital TV penetration. Israel approved the launch of digital TV services in 2008 and subsidies covering half the cost of the set-top box are available to some groups. In 2011, demand for flat-screen TV sets continued to rise and the emergence of 3D TV has prompted a mini-resurgence in sales of plasma TV sets.
- The Israeli government has launched various initiatives to increase computer and internet penetration. The current rate of PC penetration, while high for the region, offers the potential for organic growth. Household penetration is estimated at around 75%. Due to digital divide issues, Israel has around 600,000 children living below the poverty line and only 3% have internet or home PC access, compared with 90% in the top income group.
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