Asia Retail Sales Tipped to be Double U.S. by 2014
Incentives to kickstart spending by Asian governments after the global downturn will help the region post retail sales almost double those of North America within four years, a report said on Monday.
The region will also post sales three times more than Western Europe, said the study by account PricewaterhouseCoopers, as it bounces back from the global downturn, which hammered demand for exports, a key economic growth driver.
The study said Asia Pacific's retail and consumer market would grow on average six percent a year between 2010 and 2014, or double the global projection.
"Although Asia's retail market was not spared the slowdown caused by the financial crisis, the region has rebounded well... Growth has been mainly driven by government incentives that have kept consumers' wallets open in the important Chinese market," the report said.
The report said retail sales in Asia would reach 5.4 trillion U.S. dollars this year, doubling the 2.52 trillion for Western Europe and well above the 3.83 trillion for North America.
It added that by 2014 Asia would post sales of 8.57 trillion dollars, North America's to be 4.53 trillion dollars, and Western Europe to record 2.74 trillion dollars.
"Demand is growing across the board, from inexpensive fast-moving consumer goods to exclusive luxury items," Ross O'Brien, director of the Economist Intelligence Unit, said in a statement.
Spending on luxury goods, which fell last year as the global economy slowed, "is back in a big way", said the report, titled "Strong and Steady: 2011 Outlook for the Retail and Consumer Products Sector in Asia".
LVMH, the world's leading luxury group marketing brands such as Louis Vuitton, Givenchy and Dior, saw its profits soar 53 percent in the first half of 2010, the report said.
China and India are expected to drive the regional growth picture, with Japan suffering as it struggles to overcome years of virtual stagnation.
China is forecast to see year-on-year retail sales growth of more than 14 percent in 2010 while total sales are predicted to soar from 2.2 trillion U.S. dollars this year to 4.6 trillion by 2014.
"The rise of the middle class in Asia, particularly in China and India, has brought with it a rise in consumption of household goods, including cleaning products cosmetics and toiletries," the report added.
High inflation in India is expected to suppress growth to under two percent this year, but rising incomes and the opening up of new stores will push average annual growth to more than four percent starting next year to 2014.
The outlook does not look promising for Japan, where concerns about a weak economy, unemployment and deflation are likely to suppress consumer confidence.
Retail sales for Japan are expected to grow just 1.3 percent this year, with expansion gradually declining to 0.4 percent by 2014.
And despite having some economic troubles at the moment Vietnam was described in the study as "a rising star" that would see retails sales growth averaging more than 10 percent a year over the next three years.
The report, produced in conjunction by PwC and the Economist Intelligence Unit, discussed the outlook for various retail and consumer products in Asia.