Boston, MA -- (ReleaseWire) -- 01/29/2014 -- The UAE retail sector is forecast to continue to grow over the next few years, with strong underlying economic growth, growing acceptance of the concept of modern retailing and expatriate wealth resulting in a strong rise in household spending across all retail subsectors. We are particularly positive about the future growth prospects for clothing & footwear and food & non-alcoholic drinks; however, we expect by far the highest proportion of the household budget to be spent on housing & utilities throughout our forecast period. Food & non-alcoholic drinks and transport will also take substantial shares.
The new UAE retail report provides an extensive and comprehensive forecast of various retail indicators including household spending and headline total spending across each retail subsector, household income and employment forecasts, demographic forecasts and a detailed breakdown of household and per capita spending across a large number of retail areas including food & drink, clothing & footwear, household goods and a number of other subsectors.
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The UAE's economy has grown at phenomenal speed over the past decade, and it has been almost impossible for the consumer goods industry to keep up with the development of tastes and preferences. Modern retail outlets are concentrated in the largest emirates of Abu Dhabi, Dubai and Sharjah, whose populations account for 34%, 32% and 19% of the total UAE population respectively, according to census data issued by the Ministry of Economy. However, the federal government's plan to pursue a largescale infrastructure spending programme in the north will bring about significant investment opportunities over the coming years, particularly in Ras al-Khaimah.
We see long-term potential in the UAE consumer market, particularly for branded and luxury goods that appeal to a sophisticated and wealthy population. We forecast average net income per capita to be a hefty US$39,294 in 2013, with 99% of households falling into the top wage bracket of US$50,000+. By 2018, 99.2% of households are expected to be in this top income bracket, which bodes well for continued high household spending on luxury and branded items. We expect a corresponding increase in household spending on personal, insurance & other; restaurants & hotels; and recreation & culture.
BMI remains bullish on the economic outlook for the UAE as a wealth of data points to continued growth. With consumer and business sentiment looking positive, the outlook for household consumption and fixed investment is particularly bright over the coming quarters. Following real GDP growth of 6.2% in 2012, we are projecting the economy to expand by a more moderate 4.1% in 2013, before slowing to 3.4% in 2014. A sharper-than-expected decline in oil prices or any unplanned outages in oil production pose the most significant threat to our forecasts.
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