We see the likelihood of escalating retail demand via consumer spending as very high. Annual EUR-terms retail sales growth was in a range of 3.6% per annum in Slovakia all the way up to a blistering 14.8% in Serbia between 2000 and 2016. We project retail sales expanding across the region between 4.2%-7.6% per annum in EUR terms in 2017E-2026E. Robust GDP growth, wage rises and price inflation should be the drivers. The base for that growth is wide: CEE-13’s demographic footprint of 160.4 million inhabitants encompasses over a quarter of the population of Europe outside of Russia. The purchasing power of these inhabitants, whilst generally low, lies in a huge range: it was just 5.9% of the European average in 2016 in Ukraine, up to 61.2% in Croatia (source: GfK). Of the capital cities, only Lithuania’s Vilnius (100.7%) exceeds the European average. The potential for convergence towards European averages is clear if the macro dynamics seen in the region since 2000 continue over the next decade.

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