Boston, MA -- (ReleaseWire) -- 01/30/2013 -- The Colombia Retail Report examines the long-term potential of the local consumer market, but flags short-term concern about the impact on Colombia's economic outlook of monetary policy and bankingsector regulation.
The report examines how best to maximise returns in the Colombian retail market while minimising investment risk, and also explores the impact of the ongoing deterioration of the global economy on the Colombian consumer and on the ability of producers and exporters to realise returns in the short term.
The report also analyses the growth and risk management strategies being employed by the leading players in the Colombian retail sector, as they seek to maximise the growth opportunities offered by the local market.
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Colombian per capita consumer spending is forecast to increase by a healthy 27% to 2016, compared with a regional growth average of 17%. The country comes fourth out of seven in BMI's Latin American Retail Risk/Reward Ratings, although it underperforms slightly for Reward.
Among all retail categories, mass grocery retail (MGR) will be the outperformer through to 2016 in growth terms, with sales expected to grow from US$14.87bn in 2013 to US$21.26bn by the end of the period. This increase of 42.9%, is higher than the forecast 41.1% rate of growth for overall food sales.
In the competitive arena, BMI sees upside potential in Colombia's status as the third most populous country and fifth-largest economy in Latin America. In addition, approximately three-quarters of Colombians live in urban areas and almost two-thirds of the population is younger than 30; facts that aid the development potential of the country's MGR sector, considering its emphasis on convenience shopping for urban dwellers.
Over the last quarter, BMI has revised the following forecasts/views:
- BMI is revising down its real GDP forecasts from 4.7% to 4.4% in 2012, and from 4.4% to 4.3% in 2013 as the ongoing deterioration of the global economy will weigh on Colombian exports more heavily than we had previously anticipated. However, we believe foreign investment in Colombia will remain relatively robust despite global headwinds, supporting a positive long-term growth outlook for the country.
- BMI forecasts that private consumption will moderate from 6.5% in 2011 to 3.6% and 4.0% in 2012 and 2013 respectively. This comes as we expect ongoing household deleveraging, amid record high levels of household debt, to continue to weigh on private consumption.
- Retail sales contracted for the first time in more than two years in April 2012, falling 2.8% y-o-y, and then grew by only 0.9% in May.
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