Venezuela Consumer Electronics Report Q2 2015
BMI View: The exchange rate reforms enacted in February 2015 are effectively a devaluation, and will have a negative impact on consumer electronics market growth in 2015. Additional economic challenges in 2015 include inflation forecast at almost 75% and GDP to contract by 3.6% in real terms. Meanwhile, the push by the government to implement the 'fair price' law in H114, which restricted vendor margins to 30%, means vendors face continued political as well as economic risk factors. The law adds to a hostile business environment and exacerbates existing challenges for vendors including currency weakness, and economic, political and security risks that are weighing on purchasing power and consumer confidence. As the economy is stabilised in the latter years of our forecast period, we believe there is considerable potential in the Venezuelan market, with vendors potentially able to tap opportunities arising from low device penetration in key categories such as smartphones, tablets and flat-screen TVs, as well as pent-up demand from a period of economic instability.
Headline Expenditure Projections
Computer Hardware Sales: USD917mn in 2014 to USD517mn in 2015. Demand expected to contract in real terms as high inflation and the devaluation of the bolívar reduce household spending power, while also raising the price of components required for local assembly.
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