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Gartner expects market growth to slow to 11% from 16% last year, while in US dollar terms growth would slow to 9% from 11%.

The world's top cellphone maker Nokia has forecast the market will fall this year.

"We are starting to see impact of the economy," claims Gartner analyst Carolina Milanesi, adding increased competition and the weaker economy would also hurt average selling prices.

"In addition, mobile phone manufacturers will be put under pressure to maintain healthy margins while they intend to further break through in the emerging markets to increase sales," she says.

Milanesi expects mobile

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phone sales in Western Europe in 2008 to be roughly at last year's level, underpinned by strong growth in the second half on the back of attractive new models reaching the market.

Sales in this key region for phone makers such as Nokia and Sony Ericsson fell 16% year-on-year in the first quarter and 8% in the second quarter.

"It's a little bit (of weakness) in every country, with the exception of Germany and France, where we are seeing strong markets," Milanesi claims.

However, it's not all gloom for the mobile firms. Handset vendors sold 304.7 million mobile phones globally in April to June, with strong demand in emerging markets lifting sales 11.8% from a year earlier, Gartner states.

Handset sales volumes in emerging markets surpassed developed markets in 2005 and last year 63% of phones were sold in these developing markets, according to Strategy Analytics.

The main gainer from surging sales in emerging markets is Nokia, whose market share rose to 39.5% in the second quarter from 36.7% in the same quarter the previous year.

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