Boston, MA -- (SBWIRE) -- 08/16/2012 -- The Israel Retail Report examines the long-term potential of the local consumer market, but flags shortterm concerns about the impact on Israel's economic outlook of weak consumer spending and a rapidly deflating housing market.

The report examines how best to maximise returns in the Israeli retail market while minimising investment risk, and also explores the impact of sluggish external demand due to the budding eurozone recession on the Israeli consumer and on the ability of producers and exporters to realise returns in the short term.

The report also analyses the growth and risk management strategies being employed by the leading players in the Israeli retail sector, as they seek to maximise the growth opportunities offered by the local market.

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Israeli per-capita consumer spending is forecast to increase by 39% to 2016, compared with a regional growth average of only 7%. The country comes fifth (out of eight) in BMI's Middle East and Africa Retail Risk/Reward Ratings, although it outperforms significantly for Risk.

Among all retail categories, over-the-counter (OTC) pharmaceuticals will be the outperformer through to 2016 in growth terms, with sales forecast to increase by nearly 39% between 2012 and 2016, from US$0.44bn to US$0.61bn, with solid demand for patented medicines among the wealthier population. In the competitive arena, BMI sees upside potential in the regulatory changes that are driving marked OTC and non-patented market growth.

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

- The Israeli economy continues to cool, and BMI holds to its view that real GDP growth will decelerate considerably in 2012. We forecast real GDP growth of 2.9% in 2012, down from 4.8% in 2011, as sluggish external demand and weak consumer spending weigh on headline growth while a rapidly deflating housing market raises the risk of a substantial slowdown in residential construction. BMI forecasts growth of 3.6% in 2013.
- BMI forecasts overall private consumption growth to slow to 3.5% in 2012 as high energy and housing costs begin to take their toll on consumer demand. However, low unemployment, public-sector wage hikes and a relatively subdued inflationary outlook are likely to prevent a more pronounced downturn.

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