Boston, MA -- (SBWIRE) -- 10/04/2013 -- The Romanian Retail Report examines the long-term potential of the local consumer market, but flags up short-term concerns about the impact on Romania's economic outlook of the volatile domestic political environment.

The report examines how best to maximise returns in the Romanian retail market while minimising investment risk. It also explores the impact of sluggish economic recovery in the EU and falling demand for Romanian exports on the Romanian consumer and on the ability of producers and exporters to realise returns in the short term.

We analyse the growth and risk management strategies being employed by the leading players in the Romanian retail sector as they seek to maximise the growth opportunities offered by the local market.

Romanian per capita consumer spending is forecast to increase by 23% through to 2017, compared with a regional growth average of 39%. The country comes ninth out of 10 in BMI's Central and Eastern Europe (CEE) Retail Risk/Reward Ratings, although it outperforms slightly on the risks side.

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Among all retail categories, mass grocery retail (MGR) will be the outperformer through to 2017 in growth terms, with sales forecast to grow by more than 49%, compared with 21.1% for overall food sales. MGR is predicted to expand its share of the total food market to 63.5% by 2017, when value sales should reach US $13.13bn.

In the competitive arena, BMI sees upside potential in the fact that large-scale infrastructure improvement is ongoing and that Romania will receive substantial influxes of EU funds and loans over the coming years. The EUR7.1bn (US$9.2bn) investment into rural development during 2007-2013 forms part of the national budget.

Over the last quarter, BMI has revised the following forecasts/views:

- Romania's improving net exports drove an above-consensus 2.2% year-on-year real GDP expansion in Q113, confirming our view that the country's economic recovery would accelerate in H113, and we hold to our forecast for real GDP growth of 1.7% in 2013. Net exports will continue driving growth, although improving private consumption and the slowing pace of fiscal consolidation will begin playing an increasingly significant role in the country's economic recovery from H213.
- In Q113 private consumption remained weak, subtracting 1.2 percentage points (pp) from growth, as public wage restorations and an increase in pensions failed to bolster the consumer spending picture. However, the figures were an improvement on the 2.6pp consumption subtracted from growth in Q412, and we now expect consumer spending to improve more significantly in H213 and 2014, as slowing headline inflation and a more robust agricultural harvest give retail sales a boost. We forecast private consumption to add 0.3pp to headline growth in 2013, from 0.1pp in 2012, and believe there are signs that Romanian consumer sentiment is turning a corner.

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