Serbia Retail Report Q1 2016
BMI View: Global economic fluctuations, changing consumer demographics and poor governance foster a poor retail outlook for Serbia where high unemployment persists and suppressed household incomes continue to lag behind regional averages in the CEE.
Past 2016, however, household incomes, employment and GDP growth will recover and the potential for retail expansion will improve, with communications and tourism offering the greatest prospects.
The Serbian economy, which depends heavily on the trade with the EU and Russia, has been suffering since the onset of the financial crisis.
The country's output struggled to make any significant gains and unemployment skyrocketed.
Many households make conservative decisions in the retail market as a consequence of a 19.5% unemployment rate, which makes almost a fifth of the country's labour force dependent on social welfare.
Economic projections for Serbia indicate that the recovery of the retail market will be delayed: real GDP is projected to rise by only 0.3% and 1.0% in 2015 and 2016 respectively.
2015 has marked a turnaround in the country's growth and monetary stimulus (the central bank cut interest rates six times in the first three quarters of 2015) will put the economy on the right track: real GDP growth is anticipated to average 4.0% during 2017-2019.
As a result, the unemployment rate will start declining more rapidly and is forecast reach 15.0% at the end of our five-year forecast period.
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