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IS COVID-19 IMPACTING THE LATAM MOBILE PHONE INDUSTRY?

May72020
Business LATAM Mobile Phone Industry

The quick answer is yes. The LATAM mobile phone wholesale industry had changed drastically in the past couple of months.  When it had initially seen little fallout at the onset of the COVID-19 global pandemic. The crisis has affected many businesses, and wholesale mobile phone sales are no different. The business is lack of demand, which has a more considerable impact on the LATAM market than supply.


LATAM Smartphone Shipment Origin (Q4 2019)

Supply vs. Demand

Before COVID-19 began its global reach, various areas were feeling the sting of supply shortages. Due to the well-known hub for the supply and manufacturing of mobile devices, China was first affected by the disease.

The LATAM market had purchased ample inventory before the Chinese Lunar New Year, so it did not immediately experience loss of supply. Until early in March when the climate changed almost overnight. Luckily, by this time, China had also begun resumed some shipments allowing certain areas to start their economic recovery.

Due to the quarantine imposed on LATAM countries after media reports of COVID-19 cases appearing in this area as well as coverage on the death tolls in other countries, demand for mobile devices also took a hit. Consumers have been home, and retailers have been closed or shut down to help flatten the curve.

The government weighs the health crisis with an unavoidable recession depending on how long they enforce closures and quarantine. Due to a looming possibility of a recession, demand will likely take the rest of the year to recover after many individuals lose their jobs and struggle to make ends meet.

Present and Future

During the lockdown, supply and demand came to a near standstill with mobile phone retailers closed. And consumers forced to stay home except for gathering necessities. Mobile devices are not considered essential.

After lockdown, many, if not all, LATAM countries will likely experience a recession. As unemployment rates rise, the mobile phone wholesale market will continue to decline throughout the next year.

Only possibly beginning to recover after 2020 is over. As smartphones have become a primary household device, many individuals may buy cheaper plans and cheaper devices. Also, they will seek out refurbished devices until the economy makes a turn for the better.

After the Pandemic

Recovery. The global pandemic will pass, and so will recession. You will find many businesses offering significant sales to help ease them through the recession and into recovery in the following years.

The prediction is that the recession will last a mere two quarters, which is much shorter than the six quarters during the Global Financial Crisis. The public health policy response will ultimately determine the length of the economic crisis in LATAM countries.

The monetary policy response has already put forth effort into emergency interest rate cuts and a fiscal stimulus in some countries. The length of both the pandemic and economic crises will further depend on the structural strengths and weaknesses of individual countries. And also, their policies recently implemented to curb infection rates are crucial.

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