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Czech Republic Retail Report Q3 2011
Business Monitor International, May 2011, Pages: 62
The Q311 BMI Czech Republic Retail report forecasts that the country’s retail sales will grow by 19% between 2011 and 2015, from a predicted CZK929.11bn (US$89.13bn) in 2011 to CZK1,101.57bn (US$105.67bn) by the end of the forecast period. Rising disposable incomes, easier access to credit, the increasing number of large retail outlets and shopping centres and increasing car ownership are key factors behind retail market expansion. EU membership since 2004 and substantial foreign direct investment (FDI) continue to drive growth, contributing to predicted annual retail sales growth of 4.0% in local currency terms over the forecast period.
The Czech Republic’s nominal GDP in 2011 is forecast to be US$219.5bn, up by 2.4% year-on-year (y-oy). Average annual GDP growth of 3.4% is predicted by BMI for 2011-2015. The population is expected to remain static at about 10.6mn throughout the forecast period, but GDP per capita is predicted to rise by 30.3% to US$27,107.
BMI data suggest that over the counter (OTC) pharmaceutical sales will grow by nearly 28%, from US$0.81bn in 2011 to US$1.04bn by the end of the forecast period.
Consumer electronic sales are forecast to expand by nearly 24%, from US$4.20bn in 2011 to US$5.20bn by 2015, with per capita consumer electronics spending forecast to grow by at least 19% to US$513 as sales of digital products increase.
Vehicle sales are expected to rise by nearly 24%, from 194,602 units in 2011 to 240,910 units in 2015. On the domestic sales front, new car registrations are estimated to have been flat in 2010 but growth is expected to recover strongly from 2011 as the economy picks up, credit becomes more widely available and the effects of government incentives begin to be felt.
Food sales in the Czech Republic, forecast by BMI to be US$12.85bn in 2011, are predicted to rise by 15.4% to US$14.82bn by 2015. Food expenditure as a percentage of GDP is expected to decrease slightly, from 5.8% in 2011 to a projected 5.1% in 2015. This reflects the broader expansion of the economy and the ability of consumers to purchase a wider range of consumer goods, although price consciousness, as in all Central and Eastern European (CEE) countries, still characterises consumers’ purchasing habits.
According to UN data, in 2010 about 38% of the Czech population was in the 20-44 age range. This is forecast to fall to 33% by 2015 but will continue to be a key element of retail spending. The proportion of the population classified by the UN as economically active was 70.7% in 2010 and is forecast to be 67.4% in 2015.
The unemployment rate is forecast to fall to 8.3% in 2011 as the effects of the global economic slowdown diminish. BMI forecasts that it will decrease to 5.5% by the end of the forecast period. Retail sales for the BMI universe of CEE countries in 2011 are forecast to amount to US$1,280bn based on the varying national definitions. Total consumer spending for the region based on BMI’s macroeconomic database is expected to be US$2,206bn. Russia, Turkey and Poland are predicted to account for an estimated 79% of regional retail sales in 2011, a share that is likely to fall only slightly, to 78%, by 2015. The Czech Republic’s forecast market share of 7.1% in 2011 is expected to decline to 6.8% over the same period.
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