Boston, MA -- (SBWIRE) -- 09/09/2013 -- The Serbia Retail Report examines the long-term potential of the local consumer market, but flags shortterm concerns about the impact on Serbia's economic outlook of extreme summer weather in 2012 hitting agricultural output.

The report examines how best to maximise returns in the Serbian retail market while minimising investment risk, and explores the impact of the eurozone crisis and declining remittances on the Serbian 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 Serbian retail sector, as they seek to maximise the growth opportunities offered by the local market. Serbian per capita consumer spending is forecast to increase by 12% to 2017, compared with a regional growth average of 37%. Serbia comes first out of 10 in BMI's Central and Eastern Europe (CEE) Retail Risk/Reward Ratings, although its Risk rating is comparatively low.

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Among all retail categories, consumer electronics will be the outperformer through to 2017 in growth terms, with sales rising 28.4% to US$1.58bn by the end of the forecast period. The consumer electronics sector is a relatively large, underdeveloped market offering growth potential in key digital products groups such as computers (12% penetration), notebook computers, 3G handsets and LCD TV sets. In the competitive arena, BMI sees upside potential in the fact that on March 1 2012 the EU awarded Serbia candidate status.

Although Serbia is unlikely to join the EU before 2018, the accession process itself will provide the government with a policy anchor and development funds. We also expect investors to be enticed by the prospect of eventual access to the single market.

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

- Despite revising down our forecast for real GDP growth in Serbia to 1.3% in 2013 and 3.4% in 2014, from 1.9% and 3.8% previously, we believe that medium-term prospects for growth remain robust despite setbacks resulting from an unexpected slowdown of economic activity in 2012. Falling inflation and interest rates will encourage a rebound in private consumption and investment in 2013, offsetting fiscal consolidation and a persistent trade deficit that continues to weigh on overall GDP growth.
- After a contraction of 2.0% in 2012, we forecast private consumption to expand by 1.2% in 2013. A rebound in agricultural production will improve labour market conditions, and inflationary pressures will begin to ease as food prices normalise and the effects of subdued demand feed through to the economy. This will allow the central bank to begin cutting interest rates by H213.

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