Economic parameters for 2015/16

Global economic developments were mixed over financial year 2014/15. While the USA and Western and Central Europe recorded robust growth rates, the economic trend was subdued on the whole in the emerging markets of Eastern Europe and Asia. Altogether, global economic growth was of a similar magnitude in 2015 as in the year before (approximately 2.4 per cent).

The global economic trend remains fragile despite the revival seen in more mature markets in particular. The economic situation has taken a turn for the worse in recent months, especially in emerging markets. Many of the commodity-exporting developing countries are suffering from low commodity prices. In combination with the uncertainty regarding the expected interest rate reversal in the USA, this could result in further capital outflows from the emerging markets. At present, the greatest uncertainty concerns economic growth in China in light of the slowdown experienced in financial year 2014/15. China’s structural transition towards boosting domestic demand is having a detrimental impact on both industry and foreign trade, and weaker import demand in China is negatively affecting global trade. The consequences for the global economy will depend on the extent to which demand continues to decline. Conditions in Russia also remain difficult as the economy continues to suffer from the low price of oil. However, after the decline recorded in 2014/15, we expect the economic trend in Russia to stabilise in financial year 2015/16.

Western Europe is still in a phase of upswing and recovery. The early indicators remain positive in a range indicating growth. The Eurozone will continue to evidence good growth prospects over the short term, assuming China succeeds in implementing a controlled slowdown of growth without triggering a significant economic downturn. This is primarily due to the sustained low level of energy prices, the weakness of the euro against the US dollar and persistently low interest rates. As a result, leading indicators continue to signal growth. Over the medium term, however, structural weaknesses will limit growth momentum. Moreover, public debt will continue to impact the medium-term growth prospects in Greece and elsewhere.

After two years of low inflation and even deflationary tendencies at times, particularly in Western and Central Europe, we are anticipating a return to slightly rising inflation rates in financial year 2015/16. However, inflation is expected to remain below average. With respect to the price of oil, we are generally expecting to see a gradual rise after the sharp decline registered in 2014/15. The increase will remain moderate, however, as in the case of other commodities. Since global demand is also expected to fall below average, no particular inflationary pressure is expected from that quarter either in the current financial year.

Against this backdrop, we expect growth in financial year 2015/16 to only minimally surpass that of the reporting period. Overall, the global economy has not yet returned to a path of sustainable growth following the financial and sovereign debt crisis. The development of emerging markets is a material factor contributing to short-term uncertainty about the global economy.


The German economy again recorded above-average performance in the reporting year 2014/15 compared with the other Western European countries. All in all, conditions are good for another year of solid growth. Leading indicators such as the ifo business climate index continue to signal growth. For the economy as a whole, we expect a similar level of growth in 2016 as in 2015 (approximately 1.6 per cent). The continued decline in the unemployment rate is benefitting private consumption and retail sales, which will remain the main economic growth drivers in financial year 2015/16. Germany’s retail industry is therefore expected to again outperform the Western European average following nominal growth of approximately 2.5 per cent in financial year 2014/15. Moreover, the current high levels of migration to Germany as a result of the refugee crisis will offer opportunities in addition to the associated logistical challenges, assuming successful integration into the labour market.

Western Europe

Economic conditions in Western Europe generally remain favourable against the backdrop of below-average oil prices, the weak euro against the US dollar and the low interest rate environment. We therefore expect economic growth to continue at a relatively solid level over the short term. For most Western European countries, we anticipate growth similar to that seen in the past financial year (1.5 per cent). Performance between the countries is not forecast to vary as greatly as in recent years. The Spanish economy is projected to continue experiencing above-average growth. In Italy, growth will presumably be below average for another year. Despite good short-term prospects, medium-term growth is likely to be impacted by the sustained high level of sovereign debt and necessary structural reforms.

The situation in the labour markets improved in many countries thanks to better economic performance in financial year 2014/15. Higher employment levels will benefit consumption and retail sales. For financial year 2015/16, we expect growth to slightly exceed the overall solid nominal growth rate of slightly more than 1 per cent registered in 2014/15 compared with the previous years. Here as well, we anticipate that Spain in particular will record above-average growth.

Eastern Europe

The trend in Eastern Europe remains mixed. We continue to project relatively robust performance for the countries of Central Europe, with growth rates of just under 3 per cent, as in the previous financial year. The economic climate will remain difficult, however, in Russia and Ukraine. We nonetheless expect the Russian economy to gradually stabilise in financial year 2015/16 after the sharp decline experienced in 2014/15. In Turkey, growth has slowed in recent quarters. We are forecasting relatively moderate economic growth of less than 3 per cent for financial year 2015/16 against the backdrop of the persistently challenging political and economic conditions.

The mixed trend in Eastern Europe is also reflected in the forecasts for retail. In the Central European countries, we expect retail sales to continue to see robust growth in financial year 2015/16. Retail in Russia and Turkey will also grow on the basis of the continued rise in prices, although price development in Russia in particular is expected to be slower than that of financial year 2014/15. In price-adjusted terms, retail sales in Turkey are expected to remain below 3 per cent, and Russia is forecast to see stagnating growth following the decline in retail sales registered in financial year 2014/15.

For the region as a whole, we are projecting slight growth for the current financial year after the decline in economic output in financial year 2014/15 that was due largely to Russia. In the medium term, we anticipate that economic momentum in Eastern Europe will increase and the continuing high degree of catch-up potential will be fully tapped.


In spite of China’s loss of economic momentum, the emerging markets of Asia remained METRO GROUP’s fastest-growing region in financial year 2014/15. We expect this to remain the case in financial year 2015/16. However, uncertainty still prevails regarding the extent of the economic downturn in China. By contrast, the Indian economy is anticipated to outperform many of the other emerging markets with growth of around 7 per cent despite the country’s existing structural problems. Japan’s economy will remain dependent on expansionary monetary and fiscal policies in the near future, which will exacerbate the long-term issues resulting from the country’s high level of public debt. For 2015/16, however, we anticipate solid growth in excess of 1 per cent.

With respect to retail sales, we expect China and India to continue to report double-digit growth rates in nominal terms. The price-adjusted growth rate is anticipated to be in the medium single-digit range in India and the high single digits in China. For the saturated Japanese market, we foresee only moderate momentum in retail.

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.