BMI's Q110 Israel Retail Report predicts that the country's retail sales will grow from about US$43bn in 2009 to nearly US$54bn by 2014. Key factors behind this growth are Israel's strong underlying economic growth, sophisticated consumption habits, its growing population and rising disposable incomes. Israel's nominal GDP was US$190.51bn in 2009, with the year's contraction of 0.1% expected to turn into growth of 2.6% in 2010 as the economy slowly begins to recover. Average annual GDP growth of 2.2% is predicted by BMI between 2009 and 2014. With the population increasing from 7.5mn in 2009 to 8.2mn during the forecast period, GDP per capita is predicted to rise by more than 23% by 2014, reaching US$31,310. The Jewish tradition of offering gifts to relatives and friends at many festivals during the year - Hanukah in December, Passover in March/April and Rosh Hashanah (Jewish New Year) in September - generates healthy demand for products such as consumer electronics, fashion goods and accessories, jewellery and other quality goods. Also, with about 30% of the Israeli population under 14, the youth market presents great potential for toy and game retailers. In 2005, 63.3% of the Israeli population was described by the UN as economically active, with 35.5% in the 20-44 age range, which is important for retail sales. In 2010, 64.3% of the population is expected to be economically active, but the proportion of those in the 20-44 age band is forecast to fall slightly to 35.3%. A very high level of urbanisation is also contributing to retail growth. In 2005, 91.7% of the population was classified by the UN as urban, and this is forecast to increase to 92.0% by 2015. In terms of retail sub-sectors, Central Bureau of Statistics (CBS) data indicate that in 2006, 3.9% of the Israeli household budget was spent on furniture and household equipment. 3.4% went on clothing and footwear, 1.3% on cosmetics and 0.4% on jewellery and watches. On this basis, the furniture and household equipment market was worth US$1.1bn in 2006, clothing and footwear was valued at US$1bn, cosmetics was US$0.4bn, and jewellery and watches was US$0.1bn. According to BMI data, retail sub-sectors that are likely to show strong growth over the forecast period include consumer electronics, with sales predicted to rise by more than 28%, from US$2.74bn in 2009 to US$3.52bn by 2014. The over the counter (OTC) pharmaceutical sector is forecast to grow from US$0.32bn in 2009 to US$0.42bn by the end of the period, a rise of more than 29%. Food and drink sales are expected to rise from US$16.73bn in 2009 to US$19.27bn by 2014, an increase of 15.2%. Automotive sales are forecast to fall by more than 25%, from US$6.19bn in 2009 to US$4.62bn by 2014.
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