Boston, MA -- (SBWIRE) -- 08/17/2012 -- BMI projects Egypt's consumer electronics spending will grow by about 10% in US dollar terms in 2012 to US$16.4bn, faster than in 2011, when the market was hit by the political upheavals of February 2011. We maintain a broadly optimistic market outlook, despite the relatively weak employment backdrop. The outlook for the Egyptian economy is gradually improving, but one downside risk is that of a disorderly devaluation of the Egyptian pound. Egypt is expected to be one of the fastest-growing consumer markets in the region over the next few years, although a number of constraints, including low disposable incomes, economic disparities, low computer literacy and channel inefficiencies, could prevent the market from fulfilling its potential. Key factors behind the forecast growth in Egypt's consumer electronics sales include the emergence of a more affluent middle class and the growing acceptance of modern retail concepts.
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Headline Expenditure Projections
Computer hardware sales: US$894mn in 2011 to US$1.0bn in 2012, +6% in US dollar terms. Forecast in US dollar terms downwardly revised due to analyst modification but computer penetration is now forecast to rise from 10% to above 20% by 2016.
AV sales: US$346mn in 2011 to US$377mn in 2012, +9% in US dollar terms. Forecast in US dollar terms unchanged, with flat-screen TV sets the main growth driver.
Handset sales: US$2.1bn in 2011 to US$2.3bn in 2012, +8% in US dollar terms. Forecast in US dollar terms unchanged with aggressive promotions and China imports expected to result in continued price pressure.
Egypt's score was 39 out of 100.0, which gave it tenth place in our latest MEA CE RRR table. BMI expects Egypt to attain a higher ranking over time due to the growth potential of its market, particularly in regions outside of Cairo, where distribution and retail infrastructures are currently underdeveloped.
Key Trends & Developments
- Flat-screen TV sets will be the main driver of Egyptian AV revenue growth as consumers upgrade and trade their old models for digital. TV penetration is about 30% of the population and this is expected to increase to around 35% over the forecast period, creating momentum for organic growth. Egypt's growing population and the emergence of a more affluent middle class will also underpin an upwards market trajectory that should outpace GDP growth.
- The Egyptian handset market is youthful and urban, with more than half the population under the age of 25. The market retains considerable untapped potential for segmentation. Slowing market growth has led to aggressively priced tariffs by operators Mobinil and Etisalat, keen on obtaining mass subscribers and boosting market share. In 2012, the government launched a crackdown on smuggled Chinese handsets which are thought to account for above 10% of the Egyptian market.
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