Boston, MA -- (ReleaseWire) -- 04/09/2014 -- Romania's retail sector will face a decline over the 2014 period but has strong growth potential for the next five years. As Romania struggles through a period of decreasing GDP, BMI predicts a decline of 2.07% in the retail sector 2014 and total household spend will drop to US$110bn. There is good news on the horizon, and BMI predicts that Romania will post modest growth in 2015 of 0.11%; this growth is predicted to increase to 2.73% in 2016 and over 6% of 2018 and 2018. The projected total spend in retail will reach US$128bn in 2018 and nominal GDP will reach US$209bn, creating opportunities for strong returns on investment for those able to capitalise on the growth.
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The Romanian retail market is characterised by strong spending in two key areas, household essentials and recreation and entertainment. The food and beverage sector will continue to take the largest share of wallet in 2014 and will account for 27.3% of total household spend, taking in US$30.1bn in total. The next largest areas of spend will be housing which takes 22.7% of spend (US$25.1bn) and transport which accounts for 14.4% of total spend in the sector. Spending on non-essentials is highest in the furnishing and home, recreation and restaurant sectors. We forecast that furnishing and home will account for 5.2% of total household spend and will reach US$5.8bn in 2014, recreation spend will account for 5.1%, or US$5.7bn and restaurant spend will be 4.9% of total spend and will reach US$5.4bn.
We predict that the total number of households earning US$10,000+ is projected to increase from 38.8% in 2014 to 51.6% in 2018. The net income per household will rise from US$10,315 in 2014 to US$12,418 in 2018. This increase and expansion of wealth across the Romanian population will increase the consumption power of the middle class and creates good opportunity for retailers targeting households coming into the US$10,000+ income bracket.
The food and beverage sector will struggle over the forecast period, declining by 2.4% in 2014, and it will show some of the weakest growth rates over the four-year forecast period. We predict an average growth rate in this sector of 2.2% over the five-year forecast period, indicating that consumers are spending their additional income in other areas such as non-essential recreation and personal care.
The key areas of opportunity over the projected period will be those with the fastest growth rates, and we predict that sectors of health, communication and personal spending will increase the fastest at an average rate of 3.4%, 3.0% and 3.3% respectively.
Spend in the recreation and restaurant sector will remain strong over the forecast period, and we project that in 2018, restaurant and recreation will have a combined spend of US$ 12.9bn, making it a strong driver of growth.
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