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By Reuters

Posted on 1 Sep 2008 at 08:24

Consumer electronics makers are bracing themselves for slower growth in the second half of this year and in 2009, but count on consumers turning to home entertainment amid tougher economic times.

"When people don't have much money, they cut on big stuff and buy things that make their lives a little bit better, like consumer electronics," TomTom co-founder Corinne Vigreux claims.

Vigreux says she expected the satellite navigation device company to be largely unaffected by the slowing economy in Europe and the US, but retailers are being "very careful" on inventory levels in the run-up to Christmas.

Consumer electronics makers from around the world have descended on Berlin to showcase their products at the IFA electronics fair.

Many companies count on the fair for new orders as retailers shop for the upcoming Christmas season, but are worried that a gloomy macroeconomic environment is casting a pall over sentiment.

"The overall market in 2008 is not very good and Europe is even worse," says Shin Ik Kang, president and CEO of LG Digital Display. A global economic slowdown, oil price increases and the subprime crisis have taken their toll, Kang adds.

Euro zone retail sales posted their biggest ever yearly fall in June and British retail sales dropped at their sharpest pace in at least 25 years in August.

Sony Chief Executive Howard Stringer believes it's hard to tell what effect an economic slowdown will have on consumer spending. He expects the consumer electronics market to slow in the second half but still sees double-digit growth in the TV market this year.

"We have not seen an impact on consumer spending yet," Stringer claims, adding people often sought solace in entertainment during uncertain economic times - citing the popularity of cinemas during the depression of the 1930s.

Stringer says home entertainment products such as TVs and Blu-ray DVD players are still selling well. And there might be even better news for consumers come the end of the year. "I see prices for Blu-ray devices to come down more and more before Christmas," he adds.