Boston, MA -- (ReleaseWire) -- 10/08/2012 -- The Bulgarian Retail Report examines the long-term potential of the local consumer market, but flags up short-term concerns about the impact on Bulgaria's economic outlook of pronounced weakness in external demand for the country's exports and a domestic banking sector highly exposed to peripheral eurozone banks.
The report looks at how best to maximise returns in the Bulgarian retail market while minimising investment risk. We also explore the impact of the increasingly precarious looking eurozone macroeconomic environment on the Bulgarian consumer and on the ability of producers and exporters to realise returns in the short term.
BMI also analyses the growth and risk management strategies being employed by the leading players in the Bulgarian retail sector as they seek to maximise the growth opportunities offered by the local market. Bulgarian per capita consumer spending is forecast to increase by a modest 18% to 2016, compared with a regional growth average of 44%. The country is eighth out of 10 in BMI's Central and Eastern Europe (CEE) Retail risk/reward ratings, largely due to its modest GDP per capita. However, 10th placed Croatia's small population, lack of modern retail space and lengthy bureaucratic procedures mean Bulgaria is unlikely to move down the table over the forecast period.
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Among all retail categories, autos will be the outperformer through to 2016 in growth terms, with sales of new imported completely built units (CBUs) growing rapidly over the coming years. BMI forecasts a 52% increase in units sold, from 24,037 in 2012 to 36,612 by the end of the forecast period. In the competitive arena, BMI sees upside potential in the fact that the Bulgarian government has moved to attract investment from major carmakers and suppliers such as Sisecam and Silcotex, which in turn will help set a precedent for future investment.
Over the last quarter, BMI has revised the following forecasts and views:
- BMI has revised down its 2012 and 2013 real GDP growth forecast to -0.1% and 1.6%, from previous forecasts of 0.6% and 1.9% respectively, due to more pronounced weakness in external demand for Bulgarian exports and a larger concomitant slowdown in domestic demand.
- BMI holds to its 2012 private consumption growth forecast of 0.4%. In Q112, private consumption increased by a mere 1.0% year-on-year (y-o-y) and our expectation for a rise in the unemployment rate to 11.7% by the end of the year, from 11.0% in April, combined with harderto- come-by credit, suggests private consumption growth is set to slow in the months ahead. Retail sales have been in negative territory, declining by 0.3% y-o-y in April from -1.8% y-o-y in March, and we see little scope for a pick-up in the coming months.
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