Boston, MA -- (SBWIRE) -- 08/09/2012 -- The UAE Retail Report examines the long-term potential of the local consumer market, but flags shortterm concerns about the impact on the UAE's economic outlook of lacklustre growth in the private nonhydrocarbon sector because of weak credit conditions.
The report examines how best to maximise returns in the UAE retail market while minimising investment risk, and also explores the impact of increased tensions between Iran and the West on the Dubai consumer in particular 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 UAE retail sector, as they seek to maximise the growth opportunities offered by the local market.
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The UAE comes third (out of seven) in BMI's MEA Retail risk/reward ratings (RRRs). Among all retail categories, over-the-counter (OTC) pharmaceuticals will be the outperformer through to 2016 in growth terms, with sales forecast to increase by nearly 45% between 2012 and 2016, from US$0.28bn to US$0.40bn as new population and healthcare spending data provide more commercial opportunities for companies in the industry.
In the competitive arena, BMI sees upside potential in the government's substantial investment in the healthcare sector, with large projects such as the Dubai Healthcare City and DuBiotech encouraging foreign direct investment (FDI).
Over the last quarter, BMI has revised the following forecasts/views:
- Following an estimated rate of real GDP growth of 3.3% in 2011, BMI's current projection sees the economy expanding 3.5% in 2012, before slowing slightly to 3.2% in 2013. Our core view on the UAE economy sees growth gradually ticking higher over the coming quarters, with elevated oil prices and improved consumer and business sentiment underpinning a steady expansion in real GDP.
- The outlook for household consumption has picked up in recent months, and BMI is now forecasting this to grow by 8.0% in 2012. In the first instance, monetary policy conditions will remain highly accommodative this year, as there is minimal likelihood of the US Federal Reserve beginning to hike interest rates any time soon (our US economists do not see rate hikes until 2014 at the earliest). More importantly, perhaps, household spending should be supported by recent government wage hikes, which have seen some public-sector employees' salaries (particularly in the judiciary, health and education sectors) double.
- According to the Statistics Centre - Abu Dhabi (SCAD), per capita income reached US$85,850 in 2010. As such, locals have significant spending power, and the emirate's relatively young population are poised to ensure long-term growth for retail operators.
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