Economic parameters for 2014/15

During the reporting period, global economic momentum increased slightly once again. However, the recovery that followed two years of economic weakness remained subdued.

While leading indicators in the United States are developing relatively robustly overall, the economies of eurozone countries are weakening once again. Overall, economic conditions in the eurozone and in emerging economies remain challenging. For these reasons, we expect that economic growth in 2015 will likely at most be slightly above the growth forecast for 2014 of 2.4 per cent. As a result, growth will again likely remain below-average in a long-term comparison.

At the same time, global economic risks have risen again slightly. The conflict between Ukraine and Russia is impeding growth beyond these countries’ own borders. In addition, the political conflicts in the Middle East are fuelling uncertainty overall. Moreover, the eurozone is still in the process of consolidating government debt, and new setbacks cannot be ruled out. As a result, we anticipate at most a slight uptick in growth for Western Europe during the new financial year. For Eastern Europe, we expect to see a somewhat higher growth rate following the weak basis for growth of under 1 per cent in 2014. We do not expect the region to produce significant growth momentum. The same is true for Asia. Here, our best-case scenario is a growth rate slightly above this year’s level. Overall, the global economy has not yet returned to a path of sustainable economic growth following the financial and sovereign debt crisis.


In the past financial year, the German economy initially picked up speed but then lost significant momentum as the year progressed. Overall, though, the German economy continued to produce above-average growth compared with the rest of Western Europe, expanding by an estimated 1.3 per cent. However, the most recent leading indicators are pointing to a slowdown – due in part to global economic weakness. While we expect to see solid economic growth of 1 per cent for 2015, it will likely remain below 2014 levels. However, this level of growth should be sufficient to ensure stable development in the job market. As a result, we expect private consumption and retailing to produce solid growth similar to that seen in the past financial year. The German economy is still in good shape compared with the rest of Europe. However, continued below-average levels of investment could impede medium term growth prospects.

Western Europe

Despite the moderate pace of recovery, economic momentum in Western Europe remained altogether subdued. The ongoing efforts to consolidate sovereign debt continue to act as a drag on economic recovery. In addition, foreign demand is only growing at a slow rate overall. Leading indicators for many countries are pointing to a slowdown. The risk of the region falling into another recession is a real possibility. Overall, we expect that economic growth in 2015 will be along the lines of 2014 at nearly 1 per cent. Growth will be supported by the weakening of the euro against the US dollar, a development that will improve export prospects altogether.

Due to the continued below-average growth prospects, the unemployment rate will decline only very slowly. As a result, we foresee little momentum for retail growth. Following a nominal growth rate of nearly 0.5 per cent in the past financial year, we expect to see at most a slightly higher nominal gain of 1 per cent for the current financial year. On a price-adjusted basis, this would mean stagnation.

At the same time, the divergent economic development of the periphery countries hurt by the economic crisis and the considerably more robust core countries is still visible. However, significant differences are already being observed among the former crisis countries. Spain is performing particularly well. Both its economy as a whole and the retail sector are also likely to grow at an above-average rate in Western European comparison during the new financial year. By contrast, the economic situation in Italy remains challenging. The country still needs to implement far-reaching reforms to improve economic output. With a view to the core countries, we expect France in particular to produce only weak economic growth during the new financial year. Aside from Germany, we expect to see above-average economic growth and thus robust retail conditions, especially in Austria, Switzerland and the Scandinavian countries.

Eastern Europe

During the past financial year, the economies of Central and Eastern Europe moved in different directions. The countries of Central Europe in particular were able to participate somewhat in the slow recovery of Western Europe thanks to their economic ties to the region. In Eastern Europe, by contrast, economic conditions proved challenging, especially in Russia and Ukraine as a result of their political conflict, as well as in Turkey.

Despite slightly improved economic prospects in Central Europe, Eastern Europe as a whole was only able to grow by just around 1 per cent in the past financial year. For 2015, we again expect to see slightly higher growth overall. However, it is very likely that growth will remain below 2 per cent and thus below the region’s growth potential for yet another year. Key factors influencing the region’s economic prospects will be the ongoing conflict in Ukraine and developments in the eurozone. Altogether, we expect that the countries of the region will continue to develop at varying speeds in 2015. The countries of Central Europe – particularly Poland, Hungary, the Czech Republic and Slovakia – are likely to produce solid economic growth. While the Ukrainian economy is likely to continue to weaken, we expect the Russian economy to produce at least a slight gain in growth again. In the medium term, we anticipate that economic momentum in Eastern Europe will increase and the high degree of catch-up potential will be fully tapped.

Below-average economic growth will continue to create challenging retail conditions. Higher nominal retail growth rates, as seen in Russia and Turkey, are primarily price-driven. Food prices have risen dramatically in recent months, particularly in Russia as a result of the ban on food imports. This situation is likely to persist for some time. For the countries of Central Europe, we project considerably more modest retail growth rates of 3 per cent. Despite the anticipated extremely low rate of inflation, price-adjusted growth would still represent real growth of nearly 2 per cent.


The emerging economies of Asia once again recorded the highest growth in the past financial year. For 2015, we project that Asia will again generate the highest growth among the regions where METRO GROUP does business. Growth will likely total approximately 4 per cent (2014: 3.8 per cent) – including Japan. For this country, we anticipate growth of approximately 1 per cent or slightly more. Over the medium term, the growth potential of Asia’s emerging economies will remain high. However, the region still needs to implement structural reforms to boost economic output.

During the reporting period, China recorded a growth rate of more than 7 per cent. As in previous years, this was the highest growth of all countries where METRO GROUP does business. For 2015, we project that growth will slip slightly below this level. Overall, the world’s second-largest economy will continue to generate less growth momentum than it had in previous years. The steps undertaken by the government to reduce existing imbalances and further liberalise the economy should be sufficient to increase growth momentum over the medium term.

Retail conditions in Asia’s emerging economies are still relatively good overall. For China and India, we project nominal double-digit retail growth rates once again for 2015. In India, this growth will continue to be inflation-driven: consumer prices are only slowly declining due to the current account deficit and the devaluation of the country’s currency. In the saturated Japanese market, we foresee only moderate retail momentum in 2015 following the value added tax (VAT) increase that took effect during the reporting period and the related pull-forward effects.

Building on our forecast for economic and retail sector developments, the following section provides an overview of the resulting implications for individual sectors as well as our sales lines.