Strong underlying economic growth, the world's fourth-largest population (which is growing), rising per capita incomes and the continued development of organised retail infrastructure are key factors behind the substantial growth expected for Indonesian retail sales. We forecast that the country's retail sales will grow from IDR1.55trn (US$149.04bn) in 2012 to IDR2.0trn (US$192.16bn) in 2016.

Indonesia's nominal GDP is forecast to be US$864.75bn in 2012, and BMI predicts average annual GDP growth of 6.2% through to 2016. With the population forecast to increase from 245mn in 2012 to 254mn by 2016, GDP per capita is predicted to grow nearly 80% between 2012 and 2016, reaching US$6,281. Tourism plays a large part in the health of the Indonesian retail industry, with Bali generating 30% of national tourist revenue, an estimated US$3bn a year.

Increasing access to credit among domestic consumers is also a boon to the industry, with data from Bank Indonesia showing that a total of 13.22mn credit cards were in circulation in the country to October 2010, up from 12.13mn to October 2009.

Food consumption is forecast to be US$135.56bn in 2012, rising to an expected US$224.06bn by 2016, an increase of 65.3%. The mass grocery retail sector, which is still developing, will achieve even more substantial growth - BMI forecasts sales will almost double to US$70.73bn in 2016 on the back of the formation of a larger, high-spending middle class with the disposable income and the inclination to shop in modern retail outlets.

Other retail sub-sectors forecast to show healthy growth over the period include over-the-counter pharmaceuticals, with sales forecast to grow by 53.4%, from US$1.92bn in 2012 to US$2.94bn by 2016. Automotive sales are expected to increase from US$13.22bn in 2012 to US$15.89bn towards the end of the forecast period; with aggregate levels of car ownership of just 1.3%, there is considerable scope for expansion.

Consumer electronic sales are predicted to rise by 65.9%, from US$10.64bn in 2012 to US$17.65bn by the end of the forecast period in 2016; a projected compound annual growth rate of 13% is expected to be one of the highest in the region. Computer sales are predicted to show faster growth than almost anywhere within the Association of Southeast Asian Nations over the next few years, albeit from a lower base.

Retail sales for the BMI grouping of Asian countries in 2012 are a forecast US$3.78trn. China and India are predicted to account for nearly 92% of regional retail sales in 2012, and by 2016 their share of the regional market is expected to be more than 92%. Growth in regional retail sales for 2012-2016 is forecast by BMI at 31.2%, an annual average of 9.0%. India is likely to experience the most rapid rate of growth, followed by Singapore. Indonesia's forecast market share of 3.9% in 2012 is expected to be at the same level in 2016.

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