Kuwait Consumer Electronics Report Q1 2013

BMI forecasts 7% growth for the Kuwaiti consumer electronics market in 2012, with spending on devicessuch as smartphones and tablets expected to benefit from a positive economic context. This surge inspending is almost wholly government-driven, with household incomes having been boosted by a seriesof public sector wage hikes and increased social benefits. There are signs that credit growth in thedomestic banking sector - which has been anaemic for the best part of two years - is beginning to pickup. Moreover, the real estate market is also starting to recover, and was up by 8.4% in the first sevenmonths of 2012. Sales will also be boosted by growing popularity of flat-screen TV sets, Androidsmartphones, notebook computers and tablets, and other premium products, as well as ongoing expansionof the electronics retail sector.

Headline Expenditure Projections

Computer hardware sales: US$362mn in 2011 to US$394mn in 2012, +9% in US dollar terms.Forecast in US dollar terms upwardly revised due to macroeconomic factors, following strongerthan expected growth in 2011.

AV sales: US$454mn in 2012 to US$484mn in 2013, +7% in US dollar terms. Forecast in USdollar terms upwardly revised due to analyst modification, and product innovation will drivecontinued growth in the flat-screen TV set category.

Handset sales: US$196mn in 2011 to US$218mn in 2012, +11% in US dollar terms. Forecast inUS dollar terms unchanged but operator promotions are driving strong growth in the smartphonemarket.

Risk/Reward Rating:

Kuwait's score was 58.1 out of 100. Kuwait ranked fourth in the MEA region in our latest RRR table,behind the UAE, but ahead of regional peers such as Saudi Arabia and Qatar.

Key Trends & Developments

Flat-screen TV sets will be the main driver of AV category sales growth over the forecast periodas consumers upgrade and trade their old models for digital. Product innovation will also boostsales, with a focus on features such as 3D, improved display quality and larger, wider screens, aswell as design and wireless capabilities.

In the mobile devices sector, the upgrade of network infrastructure to support new data serviceswill help to drive demand for 3G phones and smartphones. Kuwaiti consumers have anincreasing demand for easy access to emails and other data services in Kuwait and when they aretravelling. Other drivers of smartphone sales include more competitive data tariffs from the mainoperators.

The popularity of multimedia portable computers with wireless connectivity will continue toprovide opportunities. Vendors will look to new form factors such as tablets and the heavilyhyped ultrabooks, which are relatively high in price, but could provide a new boost to the PCmarket in 2013.