Boston, MA -- (ReleaseWire) -- 11/15/2012 -- The Serbian Retail Report examines the long-term potential of the local consumer market, but flags shortterm concerns about the impact on Serbia's economic outlook of fiscal consolidation.
The report examines how best to maximise returns in the Serbian retail market while minimising investment risk, and explores the impact of the eurozone crisis and declining remittances on the Serbian 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 Serbian retail sector, as they seek to maximise the growth opportunities offered by the local market.
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Serbia comes first out of 10 in BMI's Central and Eastern Europe (CEE) Retail Risk/Reward Ratings, although its Risk rating is comparatively low.
Among all retail categories, consumer electronics will be the outperformer through to 2016 in growth terms, with sales rising 28.6% to US$1.56bn by the end of the forecast period. The consumer electronics sector is a relatively large, underdeveloped market offering growth potential in key digital products groups such as computers (12% penetration), notebook computers (23% CAGR projected), 3G handsets (70% CAGR) and LCD TV sets (18% CAGR).
In the competitive arena, BMI sees upside potential in the fact that, on March 1 2012, the EU awarded Serbia candidate status. Although Serbia is unlikely to join the EU before 2018, the accession process itself will provide the government with a policy anchor and development funds. We also expect investors to be enticed by the prospect of eventual access to the single market.
Over the last quarter, BMI has revised the following forecasts/views:
- BMI has revised down its forecast for Serbian real GDP growth from 0.4% to 0.2% in 2012 because of a sharp contraction in Q112. The eurozone crisis will weigh on exports and investment, while fiscal consolidation will reduce domestic demand in H212. While 2012 will be a difficult year for Serbia, the economy's long-term potential remains strong, and we forecast trend growth of over 4.0% after 2013.
- BMI forecasts private consumption to grow by 0.5% in 2012, down from an estimated 2.0% in 2011. Households will be weighed down by high and rising unemployment - we expect it to increase to 25.5% - while the eurozone recession hits inbound remittances, which accounted for 14.8% of GDP in 2010.
- Retail sales recorded their first y-o-y expansion in March (in real terms) for 14 months, expanding by 4.4% y-o-y and then by 3.5% y-o-y in April. Sales were supported by increases in public-sector wages. However, BMI expects this expansion to moderate later in the year as inflation picks up to 4.7% y-o-y by year-end, from a low of 2.7% in April.
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