Sharp drop in retail sector seen this year

GROWTH in the Philippines’ retail and consumer sector is forecast to drop by half this year, the sharpest fall in Southeast Asia, according to a report by PricewaterhouseCoopers (PwC). In a report titled “Strong and Steady: 2011 Outlook for the Retail and Consumer Products Sector in Asia,” PwC said the Philippines’ retail and consumer industry will grow by 3.2 percent this year, or half the estimated 7 percent expansion in 2010.

Last year’s expansion was the highest since 2007 after the Philippine retail sector registered its weakest growth in 2009 at 0.9 percent.

Indonesia and Vietnam likewise would endure slower growth at 4.2 percent and 10.6 percent this year, from the 4.4 percent and 13.1 percent in 2010.

In contrast, growth in Malaysia, Singapore and Thailand would pick up to 3.3 percent, 3.2 percent and 4.8 percent this year, from last year’s estimates of 2.3 percent, 1.6 percent and 3.3 percent.

“Vietnam will be a rising star, with growth averaging over 10-percent annually to 2014. Growth in the
Philippines, Indonesia, Malaysia, Singapore and Thailand is expected to average 3 [percent] to 5 percent over the projected period,” the report, produced in cooperation with the Economist Intelligence Unit, said.

The PwC growth forecast for the Philippine retail and consumer sector is also below the Asia-Pacific average of 6 percent, which in turn is 2 percent to 3 percent higher than the projection for the global industry.

PwC said China and India would drive overall growth in the Asia-Pacific region over the next 5 years.

“For many multinational retail and consumer companies, entering the Asian market is more than a matter of expanding market reach. It has become fundamental to their strategic growth. In some ways, the ‘emerging markets’ moniker obscures the fact that many Asian economies—China in particular—are already among the world’s most important markets, and they promise some of the few global opportunities for long-term growth,” Carrie Yu, PwC’s retail and consumer leader for China and Asia Pacific said.

Earlier, the National Economic and Development Authority (NEDA) said that consumer spending would remain a driver for Philippine economic growth this year, given the resilience of remittances.

NEDA Director General and Socioeconomic Planning Secretary Cayetano Paderanga had said rising prices of food, fuel and transportation services were unlikely to dampen consumer spending.

Personal consumption expenditures (PCE) account for about 70 percent to 80 percent of Philippine gross domestic product (GDP), the country’s broadest measure of economic performance.

Philippine GDP grew 6.5 percent in the third quarter of 2010, as PCE expanded 8 percent. In the second quarter, PCE grew 9 percent.

For this year, the government expects GDP to grow between 7 and 8 percent. –KATRINA MENNEN A. VALDEZ REPORTER, Manila Times