Boston, MA -- (SBWIRE) -- 10/23/2012 -- BMI View: We project Serbian consumer electronics spending will grow by about 5% in US dollar terms in 2012 to US$1.2bn, with the macroeconomic headwinds originating from the eurozone having put a brake on faster growth for now. Serbia is one of the poorest markets in Central and Eastern Europe, and stubbornly high unemployment will constrain household spending in the short term, while elevated inflation will impinge on real purchasing power. However, underlying economic growth, rising disposable income and the development of organised retail infrastructure are forecast to drive growth longer-term. Sales of flat-screen TV sets and feature-rich notebook computers will continue to benefit from falling prices and more aggressive vendor and distributor promotion.

Headline Expenditure Projections

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- Computer hardware sales: US$488mn in 2011 to US$504mn in 2012, +3% in US dollar terms. Forecast in US dollar terms downwardly revised due to analyst modification, but computer penetration is forecast to rise to above 20% by 2016.
- AV sales: US$422mn in 2011 to US$436mn in 2012, +4% in US dollar terms. Forecast in US dollar terms unchanged, with flat-screen TV sets the main growth driver.
- Handset sales: US$253mn in 2011 to US$276mn in 2012, +9% in US dollar terms. Forecast in US dollar terms unchanged, with demand for advanced phones encouraged by new data applications.

Risk/Reward Ratings:

Serbia's score was 35.90 out of 100.0, which gave it eighth place in our latest EUR CE RRR table. BMI expects Serbia to climb up our RRR rankings over time due to the growth potential of its market, particularly given low, but rising PC penetration.

Key Trends & Developments

- Demand for higher-end models will help support the Serbian handset market in the face of the slowing subscriber growth rate. The smartphone penetration rate is considerably below the 18% level found in Western European markets, leaving plenty of room for growth. In 2011, demand for more expensive smartphones and high-end feature phones was reported by retailers to hold up fairly well, despite the economic crisis.
- According to the Serbian Ministry for Telecommunications and Information Society, Serbia was due to complete its switchover to digital broadcasting of radio and TV programmes by April 4 2012. After years of delays, the commitment to a deadline should help to put the market for digital TV sets on a more promising trajectory. The government has also announced additional funding to support the transition, including new funds to subsidise set-top box purchases.

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