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Retail growth forecast of 3.4%

17 Jan 2011

Prof Deon Tustin, executive research director of the Bureau of Market Research (BMR) at Unisa has released a report forecasting a 3.4% real growth rate for formal retail sales in 2011. This will be achieved within an expected economic growth rate of 3.5% in GDP for the economy as a whole. This implies that retail trade sales will amount to R605 796 million in 2011. According to the report, nondurable retail sales are anticipated to increase by 3.1% while durable retail sales growth is anticipated to increase by 3.4% in 2011. Sales growth of 3.7% is anticipated for semi-durable retail trade products.

The report, Forecast Of Economic Indicators And Formal Retail Sales By Product Group For 2011, implies that the retail sector is anticipated to move further out of its recessionary condition on the back of moderating inflation and a lower and stable interest rate environment. In this regard, the BMR anticipates retail prices to increase by 3.5 % for 2011. It warns however that robust retail sales growth may be tempered by high debt levels of consumers, stringent and challenging financial conditions and lower wage increases anticipated for 2011.

According to Tustin, the 2011 retail sales forecast does not bode well for sustainable retail sales recovery. In fact, broad-based recovery will largely depend on increased employment with its concomitant increase in labour remuneration, access to credit, relatively low and stable interest rates and higher savings levels.

The 2011 real growth in retail sales is anticipated to be lead by sales in clothing and accessories as well as glass, crockery, cutlery and kitchenware, sport and recreation requisites and hardware (all above 3.5% but a maximum growth of around 4.0%).

The 81 page report is available from the BMR.