A return to growth in 2021

1 min read

After the turmoil of 2020 it’s certainly difficult to predict with any certainty how the UK economy is likely to perform as we enter 2021. After the record contraction of the spring months and the bounce back in the summer, most forecasters have had to re-write the forecasting book.

Despite the challenges associated with forecasting in this environment, the Electronic Components Supply Network (ecsn) has attempted to provide a consolidated Forecast for the year in prospect.

Last year’s forecasts were overtaken by events so for this Forecast they only covered the first half of the year, as association members chose to limit their predictions for the second half of the year to their ‘best guidance’.

According to ecsn's chairman Adam Fletcher, this 'best guidance' was a result of a lack of customer visibility in the components market coupled with a wide range of “unknown unknowns” and uncertainties due in no small part to Brexit, the ongoing pandemic, US/China tensions and global economic instability.

The Forecast predicts that the UK & Ireland electronic components market will be ‘flat’ in the first half of 2021 in the range -2% to 4%, with a mid-point decline of -0.5%. In its provisional guidance for the second half of the year the association sees Billings (Sales Revenues) growing modestly to give an outcome for the full year in the range 0%-to-6.5%, with a mid-point of 2.7% growth.

That modest rate of growth follows a predicted market decline of 8% in 2020.

The lack of clear guidance from customers means that there is certainly a far wider and more diverse range of opinions for 2021 but, according to ecsn , it’s likely the UK and Ireland will see a slow return to low single digit growth, and that the first half of 2021 will be more or less ‘flat’ compared to the first half of 2020.

Fletcher predicted that any growth was likely to adopt a hockey stick shaped curve towards the end of 2020 and into 2021, and he also raised concerns over supply towards the end of next year as a result of growth in the US, Europe and Japan.

“Even modest growth in 2021 might trigger a major supply problem in the global electronic components market,” he warned.

Yet ,despite the 8% decline in 2020, Fletcher was upbeat and made the point that the performance of the UK electronic components market and the wider electronic industry should be viewed as having been, “fairly remarkable given the dreadful economic environment in which we are all currently operating”.