Boston, MA -- (SBWIRE) -- 08/28/2012 -- The Kuwait Retail Report examines the long-term potential of the local consumer market, but flags shortterm concerns about the impact on Kuwait's economic outlook of political gridlock in parliament that continues to disrupt the implementation of the government's highly publicised development plan.
The report examines how best to maximise returns in the Kuwaiti retail market while minimising investment risk, and also explores the impact of any sustained downturn in global energy prices on the Kuwaiti consumer and on the ability of producers and exporters to realise returns in the short term.
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The report also analyses the growth and risk management strategies being employed by the leading players in the Kuwaiti retail sector, as they seek to maximise the growth opportunities offered by the local market.
Kuwaiti per capita consumer spending is forecast to increase by 38% to 2016, compared with a regional growth average of only 7%. The country comes fourth (out of seven) in BMI's Middles East and Africa (MEA) Retail Risk/Reward Ratings, although it underperforms slightly for risk.
Among all retail categories, consumer electronics will be the outperformer through to 2016 in growth terms, with sales forecast to increase by 29% between 2012 and 2016, from US$1.05bn to US$1.36bn, with BMI forecasting per capita consumer electronics spend reaching US$339 by 2016 on the back of a high-earning, tech-literate population.
In the competitive arena, BMI sees upside potential in trade liberalisation, with the elimination of customs duties within the Gulf Cooperation Council (GCC) continuing to stimulate the market; and in telecoms deregulation and 3G expansion, which will drive competition in value-added services and support spending levels on handsets.
Over the last quarter, BMI has revised the following forecasts/views:
- BMI forecasts real GDP growth of 4.5% in 2012, down only modestly on estimated growth of 5.7% last year. We expect the Kuwaiti economy to continue growing robustly in 2012. Elevated global hydrocarbon prices will allow the government to keep fiscal spending high, driving domestic consumption, while oil production looks set to remain near capacity in the months ahead. We forecast the economy to expand by 3.7% in 2013.
- BMI expects household consumption to be a major source of growth in 2012, fuelled by an across-the-board wage hike of 25% for all government employees, as well as a 15% increase in pension entitlements. However, as inflation and base effects kick in, we expect consumption growth to moderate in the years ahead, forecasting average real GDP growth of 3.6% in the period 2013-2017.
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