BMI View: The development of Croatia's consumer electronics market has been stymied by the challenging economic environment in the country, which has seen GDP contract in real terms between 2010 and 2013. Declining consumption, unemployment, currency depreciation and fiscal austerity continue to squeeze demand for devices, countering the positive impact of some technology trends such as adoption of smartphones, tablets and smart TVs. BMI believes big-ticket items such as TVs and PCs have been hardest hit by the economic challenges faced in Croatia, leaving the handset market as the outperforming sub-segment. While there have been many challenges, we forecast stronger economic performance from 2015, which, when combined with declining average selling prices in several key product categories and the relatively low penetration rates, will drive spending growth in the latter years of our forecast.
Headline Expenditure Projections
Computer Hardware Sales: USD527mn in 2013 to USD497mn in 2014; -5.8% in US dollar terms. Challenging economic conditions are limiting big-ticket purchases, while the shift in the composition of sales to cheaper tablets is an additional squeeze on the growth of sales value.
AV Sales: USD266mn in 2013 to USD279mn in 2014; +4.7% in US dollar terms. Demand for smart TVs is boosting growth, but cannibalisation of digital cameras and standalone mp3 players by multi-functional smartphones is a drag on performance.
Handset Sales: USD277mn in 2013 to USD289mn in 2014; +4.2% in US dollar terms. The handset market is expected to fare better in a challenging macro environment due to lower average selling prices.
Key Trends & Developments
The Croatian smartphone market has been outperforming the general consumer electronics market, and we expect this trend to continue in the medium term. Data from leading mobile operator T-Mobile show smartphone penetration in its subscription base reached 32% at the end of 2013, with smartphones accounting for 60% of...