Boston, MA -- (SBWIRE) -- 07/02/2012 -- Our outlook on the UAE's food and drink sector is positive, as consumer confidence appears to be returning. We expect growth of the core economy to gradually tick higher over the coming quarters, with elevated oil prices and improved consumer and business sentiment underpinning a steady expansion in real GDP. Following estimated real GDP growth of 3.3% in 2011, our current forecast is for 3.5% growth in 2012. The outlook for household consumption has also picked up in recent months, and we are now forecasting this to grow by 8.0% in 2012 as household spending is supported by recent government wage hikes, which have seen some public sector employees' salaries (particularly in the judiciary, health and education sectors) double. Monetary policy conditions will remain highly accommodative in 2012, as there is minimal likelihood of the US Federal Reserve hiking interest rates any time soon.That said, with new credit growth expected to remain in the low single digits, we believe a cautious stance is still warranted. Growth in the private non-hydrocarbon sector will be constrained by still-weak credit conditions. Moreover, our outlook on private consumption is tempered by recent reports which have indicated that UAE firms were among the most likely in the Gulf Cooperation Council to cut staff in 2012.
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Headline Industry Data
- 2012 per capita food consumption growth (local currency) = -0.1%; forecast to 2016 = 17.8%
- 2012 soft drinks value sales growth (local currency) = 6.6%; forecast to 2016 = 47.9%
- 2012 mass grocery retail sales = 7.9%; forecast to 2016 = 54.6%
Key Company Trends
Geant Expansions: In March, the sixth Geant Easy banner supermarket was opened in the UAE by Retail Arabia, which operates the Geant banner under license from Casino. The new store, which is the first in Abu Dhabi, is part of the company's growth strategy that will see it opening 35 more stores in the UAE in the next two years. The store is located in the One Stop Center compound in Khalifa City A. As well as Geant, Retail Arabia operates LastChance and La Marche supermarkets in the Gulf Cooperation Council region.
Fast-Food Rising: In April, South Africa-based restaurant chain Nandos launched its 10th store in the Dubai Internet City and also announced its intension to double the number of restaurants in the UAE. Meanwhile, in March local restaurant chain Emly and Chilli opened its first outlet in Sharjah, the third new store over a five-month period.
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