Boston, MA -- (SBWIRE) -- 05/10/2013 -- 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 the government's return to its multi-year fiscal consolidation drive, which has seen pensions and wages frozen and reductions in public employment.

The report looks at how best to maximise returns in the Bulgarian retail market while minimising investment risk. We also explore the impact of weakening demand from the eurozone on the Bulgarian consumer and on the ability of producers and exporters to realise returns in the short term.

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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 21% between 2013 and 2017, compared with a regional growth average of 42%. 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, ninth placed Romania, with its larger population and greater forecast sales growth over the period, has the potential to overtake it. 10th placed Croatia's small population, lack of modern retail space and lengthy bureaucratic procedures are likely to keep it below Bulgaria in the rankings.

Among all retail categories, consumer electronics will be the outperformer through to 2017 in growth terms, owing to relatively low household penetration rates for digital product groups such as notebook computers (30% CAGR projected) and LCD TV sets (17% CAGR). BMI forecasts a 26% increase in sales, from US $1.40bn in 2013 to US$1.76bn by 2017.

In the competitive arena, BMI sees upside potential in the influx of EU funds helping to boost spending on computers and drive information and social development.

Over the last quarter, BMI has revised the following forecasts and views:

- BMI continues to expect a moderate recovery in the Bulgarian economy to gather pace in 2013, forecasting real GDP growth of 1.5% versus an estimated expansion of 0.4% in 2012. This will be driven by a modest recovery in the eurozone - we forecast the bloc's GDP growth to be 0.5% in 2013 versus -0.7% the previous year - coupled with some loosening of the fiscal reins ahead of parliamentary elections in the summer of 2013.
- Household consumption has been the principal driver of Bulgarian economic growth in 2012, expanding by 4.5% year-on-year (y-o-y) in Q3. Real wage growth remained robust throughout the year, averaging 4.3% y-o-y in spite of persistently high unemployment ticking up to 11.3% in November. However, high frequency data suggest that private consumption sagged in late 2012, with retail sales contracting by 3.1% y-o-y and by 4.3% in September and October respectively.

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