Colombia Retail Report Q3 2010

The Q310 BMI Colombia Retail Report forecasts that the country's retail sales will grow from an estimated COP177.92bn (US$90.46bn) in 2010 to COP224.93bn (US$114.37bn) by 2014. Underlying economic growth, a young and increasingly urban population, the rise in disposable income and greater numbers of working women are key factors behind the forecast growth in Colombia's retail sales.

Colombia's nominal GDP is predicted to be US$249.65bn in 2010, with 2009's marginal growth of 0.4% expected to improve to 2.1% in 2010 as the economy slowly begins to recover. Average annual GDP growth of 3.2% is predicted by BMI between 2010 and 2014. With the population increasing from an expected 49.4mn in 2010 to an estimated 52.6mn by 2014, GDP per capita is forecast to rise 30.0% by the end of the forecast period, reaching US$6,566. Our forecast for consumer spending per capita is for an increase from a predicted US$3,324 in 2010 to US$5,132 by 2014.

Domestic demand will continue to be the key driver for the growth in GDP, with improvements in the security outlook feeding through to increased consumer and investor confidence. In 2006, 1.97mn foreign tourists visited Colombia, a 48% increase over the previous year.

In 2005, 64.5% of the Colombian population was described by the UN as economically active, with 39.2% in the 20-44 age range, which is crucial to retail sales. Over three-quarters of the population were classified by the UN as urban (77.4%). By 2010, the urban population is forecast to have reached almost 80%, with 38.5% in the 20-44 age band and 67.3% of the population expected to be active. The retail sector benefits from Colombia's status as the third most populous country in Latin America.

Retail sub-sectors that are likely to see strong growth over the period include over-the-counter (OTC) pharmaceuticals, which BMI forecasts to grow from US$0.50bn in 2010 to US$0.87bn by 2014, a rise of 73.5%. Sales of consumer electronic products are estimated at US$3.54bn in 2010, with BMI forecasting a 41.7% rise to US$5.01bn by 2014.

Retail sales for our Latin American universe in 2010 are expected to reach US$1,166bn, based on varying national definitions. Total consumer spending for the region, based on BMI's macroeconomic database, is predicted to be US$2,590bn. Mexico and Brazil together are expected to account for an estimated 74.3% of regional retail sales in 2010; with the two countries plus Venezuela likely to account for 85.3% of all retail sales in the region by 2014. For Colombia, the predicted 2010 market share of 7.8% is expected to fall to 6.3% by 2014.