Turkey Retail Report Q3 2012

The Turkish Retail Report examines the long-term potential of the local consumer market, but flags shortterm concerns about the impact on Turkey’s economic outlook of the large current account deficit and the economy's overreliance on short-term capital inflows.

The report examines how best to maximise returns in the Turkish retail market while minimising investment risk, and also explores the impact of slowing domestic demand resulting from the surge in global oil prices on the Turkish 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 Turkish retail sector, as they seek to maximise the growth opportunities offered by the local market.

Turkish per-capita consumer spending is forecast to increase by 62% to 2016, compared with a regional growth average of 59%. The country comes fifth (out of 10) in BMI’s Central and Eastern Europe (CEE)

Retail Risk/Reward Ratings. Among all retail categories, Mass Grocery Retail (MGR) will be the outperformer through to 2016 in growth terms, with sales forecast to reach US$15.72bn in 2012, and to grow much faster than overall food sales throughout the forecast period – by more than 84%, compared with 58% – to US$28.95bn by 2016.

BMI forecasts that MGR’s share of the overall food market will rise from 36.2% in 2012 to 42.1% by the end of the review period.

In the competitive arena, BMI sees upside potential in the fact that the Turkish government has recently announced a new investment incentive package to help attract investment to underdeveloped regions, mainly in the south east and east of the country.

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

Despite the improvement in global liquidity witnessed over the past quarter, BMI holds to its forecast for Turkish real GDP growth to fall significantly to 1.8% in 2012, down from an estimated 8.0% in 2011. In 2013 and 2014 we expect real GDP growth to pick up towards 5.4%.

BMI sees private consumption coming off the boil in 2012, and forecasts real growth of just 2.4%, down from 7.0% in 2011. This will result in a percentage contribution to real growth of just 1.6% in 2012, down from 4.8% in 2011 and 4.7% in 2010.

BMI expects the government's introduction of a special consumption tax on automobiles and mobile phones, as well as cigarettes and alcohol products, to have a noticeable effect on consumption levels in the economy over the coming quarters.