Argentina Retail Report Q3 2013 - New Market Report

The Argentina Retail Report examines the long-term potential of the local consumer market, but flags shortterm concern about the impact on Argentina's economic outlook of the prospect of a sizeable currency devaluation.

The report examines how best to maximise returns in the Argentine retail market while minimising investment risk, and also explores the impact of deteriorating relations between Argentina and its key trade partners on the Argentine consumer, and on the ability of producers and exporters to realise returns in the short term.

The latest report also analyses the growth and risk management strategies being employed by the leading players in the Argentine retail sector, as they seek to maximise the growth opportunities offered by the local market.

Full Report Details at
- http://www.fastmr.com/prod/670610_argentina_retail_report_q3_2013.aspx?afid=301

Argentine per capita consumer spending is forecast to increase by 28% to 2017, compared with a regional growth average of 27%. Argentina comes seventh (out of seven) in BMI's Latin American Retail Risk/ Reward Ratings.

Among all retail categories, consumer electronics will be one of the outperformers through to 2017 in growth terms, with sales forecast to increase by 24% between 2013 and 2017 - from US$5.69bn to US $7.06bn. PC penetration is fairly low at about 25%, and this is expected to climb to more than 30% by 2017, creating opportunities for vendors.

In the competitive arena, BMI sees upside potential in the Conectar Igualdad programme to provide 3mn PCs to public schools nationwide, which should provide opportunities for manufacturers and retailers alike. Over the last quarter, BMI has revised the following forecasts and views:

* BMI forecasts that the marked slowing in the Argentine economy will continue, with real GDP growth falling to 1.8% in 2013 from 1.9% in 2012, as currency devaluation pushes inflation higher, weighing on consumer and government spending, and liberalised import policies result in a greater net export drag on real GDP growth. That said, we forecast that base effects and greater competitiveness will boost real GDP growth to 2.9% in 2014.
* While BMI expects nominal private consumption growth to remain quite strong, we forecast real private consumption growth to fall to 0.5% in 2013 from 4.4% in 2012 on the back of even higher inflation than we witnessed in 2012 and an uptick in unemployment. As a result, we expect real private consumption to contribute just 0.3 percentage points to real GDP growth this year.
* We note that our 2012 inflation estimate of 24.9%, which far exceeds the official government reading of 10.8% inflation, shows prices rising faster than shopping centre sales and wage growth during parts of last year; a pattern we expect to continue over the next few quarters, underpinning our forecast for private consumption growth to slow.

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