Boston, MA -- (SBWIRE) -- 08/21/2012 -- The Peru Retail Report examines the long-term potential of the local consumer market, but flags shortterm concerns about the impact on Peru's economic outlook of sluggish growth in net exports.
The report examines how best to maximise returns in the Peruvian retail market while minimising investment risk, and also explores the impact of a potential global growth slowdown on the Peruvian 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 Peruvian retail sector, as they seek to maximise the growth opportunities offered by the local market.
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Peruvian per-capita consumer spending is forecast to increase by 27% to 2016, compared with a regional growth average of 19%. The country comes third (out of seven) in BMI's Latin American Retail Risk/Reward Ratings, although it outperforms slightly for Reward.
Among all retail categories, autos will be the outperformer through to 2016 in growth terms, with unit sales forecast to increase from a forecast 180,072 units in 2012 to 315,823 units by 2016, representing growth of more than 75%. In light of strong Q112 growth figures - vehicle sales in Peru increased by 35% year-on-year (y-o-y) during the quarter, to 44,345 units - and a number of macroeconomic factors, BMI has revised its forecast annual growth rate from 22% y-o-y to 26% y-o-y.
In the competitive arena, BMI sees upside potential in the entry of more auto manufacturers into the market, increasing competition and driving down vehicle prices, fuelling demand. A reduction in import taxes will also bring prices down.
Over the last quarter, BMI has revised the following forecasts/views:
- BMI maintains its below-consensus 4.8% real GDP growth forecast for 2012. Although Peru's strong domestic demand story will continue in 2012, an anticipated drag from net exports will hold growth down. In addition, significant external risks mean we cannot rule out a more pronounced slowdown in growth in the latter stages of the year.
- BMI expects private consumption growth to continue or even increase in early 2012, after expanding by 6.4% y-o-y in Q411. Private sector credit growth picked up strongly in January, to 15.6% y-o-y, in line with our view for credit growth to reach a strong 16% by year-end. Unemployment also remains anchored near record lows which is good for consumption, as is the appreciating exchange rate, which is keeping households' purchasing power high.
- BMI's forecast for strong private consumption has been reinforced by signs of rising demand since the beginning of 2012 - retail activity in Peru climbed 7.9% in the first three months of 2012.
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