The global mobile phone market will shrink nine per cent this year, its first decline since 2001 and with the first half set to be especially grim as economic slowdown chokes consumer spending, Strategy Analytics (SA) said.

"We expect the first half of this year to be very weak, as the industry is hit by a double whammy of slowing post-holiday shipments in developed markets and subdued demand during the normally buoyant Chinese New Year in Asia," said SA.

It forecast 1.08 billion handsets would be sold this year, down from 1.18 billion last year in what would be the first year-on-year fall since sales dipped six per cent in 2001, the only time the market has seen a reversal since the cellphone industry began in 1983.

The economic slowdown led to the industry's weakest showing in the fourth quarter of last year since October-December 2001, SA said, with shipments slumping 10 per cent year-on-year to 295 million units.

It was the first time SA had seen shipments in the traditionally buoyant quarter lower than the third quarter.

"Retailers de-stocked and burned off existing inventory due to credit tightness, while consumers delayed purchases because of fears of a recession," it said.

SA's report came after a week of gloomy data and outlooks from Nokia, Samsung, LG and Apple.