New Retailing market report from Business Monitor International: "Colombia Retail Report Q3 2013"
Boston, MA -- (SBWIRE) -- 09/11/2013 -- We believe that there is a great deal of long-term potential for the local consumer market in Colombia, but flag up short-term concerns about the impact of ongoing household deleveraging on the country's economic outlook.
The Colombia Retail Report examines how best to maximise returns in the Colombian retail market while minimising investment risk, and also explores the impact of a significant economic deterioration in the US, Colombia's main export destination, on the Colombian consumer and on the ability of producers and exporters to realise returns in the short term.
Colombian per capita consumer spending is forecast to increase by 34% to 2017, compared with a regional growth average of 27%. Colombia comes fourth (out of seven) in BMI's Latin American Retail Risk/ Reward Ratings.
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Among all retail categories, mass grocery retail (MGR) will be the outperformer through to 2017 in growth terms, with sales expected to grow from US$14.87bn in 2013 to US$22.33bn by the end of the period. This increase of 50.2% is higher than the forecast 47.4% rate of growth for overall food sales.
In the competitive arena, BMI sees upside potential in Colombia's status as the third most populous country and fifth largest economy in Latin America. In addition, approximately three-quarters of Colombians live in urban areas and almost two-thirds of the population are younger than 30; facts that aid the development potential of the country's MGR sector, considering its emphasis on convenience shopping for urban dwellers.
Over the last quarter, BMI has revised the following forecasts/views:
- While we recently revised our 2012 real GDP growth estimate for Colombia from 4.4% to 3.8%, on the back of weak gross fixed investment in H212, we maintain our real GDP growth forecasts of 4.3% and 4.4% in 2013 and 2014 respectively. Indeed, we expect investment to pick up over the coming quarters, driven by a strong infrastructure pipeline and an attractive oil and gas sector. Moreover, we anticipate private consumption to improve throughout 2013 and remain robust over the coming years, as the ongoing household deleveraging cycle gradually comes to an end.
- We anticipate gradual improvements in private consumption over the coming years, following slower household spending growth in 2012. While an ongoing household deleveraging cycle weighed substantially on the consumer in 2012, we expect its negative impact on spending to slowly fade out this year, particularly in H113. Indeed, consumer credit growth has already slowed significantly from its August 2011 peak of 28.5% year-on-year (y-o-y), coming in at 17.5% y-o-y in December 2012, and we believe it is nearing its bottom as broad improvements in consumer confidence point to stronger household spending over the coming quarters. We therefore forecast real private consumption growth to come in at 4.3% in 2013 and 4.4% in 2014, compared to 4.0% in 2012.
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