Boston, MA -- (ReleaseWire) -- 05/26/2014 -- Serbia's retail market continues to struggle in the short term and we forecast minimal growth of 0.14% total household spending in 2014. The country comes second to last out of 10 in BMI's Central and Eastern Europe Retail Risk/Reward Ratings, Highlighting its weak performance relative to its peers.
Although Serbia is not a member of the EU, its ongoing efforts to join and close trade ties with member nations helps bring long-term growth prospects to the nation. BMI forecasts that by 2018 Serbia's retail sector will grow to US$39bn and will have a GDP of US$55bn. The modest long-term growth prospects create opportunity for investment, however currency fluctuations and political uncertainty and ongoing unemployment create risk.
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The short-term outlook for Serbia's overall GDP and retail sector is not impressive, with BMI forecasting minimal growth over the next two years; however, growth will pick up towards the end of the projection period.
- Household spending will increase a modest 0.14% and remain a constant US$32bn in 2014.
- Real GDP growth will pick up towards the end of the projection period: 2017 and 2018 have forecast growth rates of 4.6%, and household spending is forecast to reach US$39bn by 2018.
- Serbian consumers continue to focus spending on the essentials, with food and non-alchoholic beverages taking 27.3% of total spending, and housing and utilities taking 23.0% in 2014.
- The retail market is expected to take 74.79% of total GDP in 2014, which is a significantly higher number than other countries in the region. This indicates a retail-focused consumer and lower levels of disposable income, which mandates spending on retail essentials.
- A trend of shifting consumer spending, and transport, recreation and health are expected to increase their share of total spending, while food and housing will see a decline in share.
- Unemployment will decline from 23.0% in 2014 to 15.0% in 2018. Despite this decline, these unemployment levels are high and are a risk and threat to long-term growth.
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