Retail recovery in sight for Philippines in 2021 | Retail Asia

Retail recovery in sight for Philippines in 2021

Household spending for 2021 is expected to be 2.8% higher than in 2019.

Philippines can look forward to a retail recovery in 2021 as household spending in the country is projected to grow 5.7% YoY on the back of a low base in 2020, according to a report from Fitch Solutions.

This marks a start of a recovery from the 7.9% contraction in household spending estimated over 2020. However, nominal household spending in 2021, at $300.1b (PHP14.3t), is just 2.8% higher than that in 2019, or $268b (PHP13.9t).

All main consumer spending categories will return to positive growth. Food and non-alcoholic drink spending were prioritised in household budgets in 2020, and so growth in spending on these items, whilst remaining positive, will be slightly lower than in 2021.

Meanwhile, spending within other consumer categories is estimated to have recorded significant contractions over 2020, and as such, these categories will grow from a relatively lower base over 2021 and thus will report stronger growth over the year.

The recovery will also be supported by the government stimulus measure in 2020, which has so far committed $12.3b (PHP595.6b) or 3.1% of the 2019 GDP in fiscal packages towards vulnerable individuals and groups, which includes cash support programs for low-income households, tax deductions, and wage subsidies.

The growth in consumer spending in the country is in line with Fitch’s forecast that the Philippine economy will grow by a real rate of 7.6% YoY over 2021 from an estimated 9.5% YoY contraction in 2020.

The Philippine economy will be propelled by fiscal stimulus through 2021, which will feed through into household spending. The monetary easing of 2020 will filter through into looser lending conditions, which should also help support domestic demand.

The pandemic poses significant risks to the Philippine economy, particularly if lockdowns are reintroduced countrywide and consumers delay purchases to reduce health risks. This could see the economy recover more modestly in 2021.

Fitch expects a recovery in unemployment and its impact on improving disposable incomes as the main driver for the consumer recovery in the country. Unemployment will fall to 9% of the labour force by the end of 2021, from the 16% at the end of 2020.

However, this is still notably higher than what it was in 2019, suggesting that the consumer recovery will continue in 2022, as employment improves.

Get Retail Asia in your inbox
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

55% of consumers are frustrated with long log-in and sign up forms.
The platform can issue authenticity certificates with a team of watch appraisers.
It is rolling out a series of promotions including an instant win game.
Some are introducing, expanding, or shortening their quick delivery services.
The flagship store will be open by the spring of 2022.
The store will bring over 800 brands, including those in the electronics sector.
One store caters to travellers, whilst the other is available only to airport staff.
Department stores in the capital have recently become hotbeds of infection.
Winners were awarded via digital award presentations on 12-16 July.
More shoppers are influenced by amusing, short videos when it comes to trying out new products.
Real household spending will continue to fall below pre-pandemic levels in the coming years.
Contrary to the popular stereotype, Singaporean men are more price-conscious than Singaporean women.
Singapore undergraduate teams will compete for $8,000 and an internship with Lazada.
Chain operators are especially expected to grow at a higher rate.