Worldwide smartphone shipments are expected to fall by 11.9% this year — their biggest annual drop ever — indicating things are going to get worse for the industry before they get better.

In its latest market forecast, research firm IDC anticipates shipments of 1.2 billion in 2020, down from just under 1.4 billion last year. The annual forecast follows a record 11.7% year-on-year drop in the three months ending March. The latest projections are a dramatic revision of an annual forecast by IDC in February, after the virus first hit, that predicted a 2.3% decline.

Pinning the blame on the coronavirus outbreak and its effects on both supply and demand, the forecast points to an upswing in sales and shipments in 2021, suggesting that some purchases will be delayed rather than entirely forgone. The proliferation of 5G wireless services will also help rekindle consumer interest, the researchers said.

“What started as a supply-side crisis has evolved into a global demand-side problem,” Sangeetika Srivastava, an analyst for IDC’s Worldwide Mobile Device Trackers said in a statement. “Nationwide lockdowns and rising unemployment have reduced consumer confidence and reprioritised spending towards essential goods, directly impacting the uptake of smartphones in the short term.”

China’s domestic market will only see a single digit decline, according to IDC, pointing to the country’s recovery from the initial outbreak. Europe, on the other hand, has suffered a heavier toll from Covid-19 and is expected to experience deeper falls in spending and demand, the researchers added.

“On the brighter side, 5G is expected to be a catalyst throughout the forecast period, which will play a vital role in worldwide smartphone market recovery in 2021,” said Srivastava. — (c) 2020 Bloomberg LP