Positive Growth Expected for the Retail Sector in the Philippines


via Credit BPO, Negosentro |  Wholesale and Retail Trade Industry is the third largest sector in the Philippines after construction and manufacturing. It is estimated that this sector shall further grow because of economic expansion and customer demand assisted by subdued inflation and increased bank lending.

A report issued by the World bank in April, 2017 showed robust remittances, lower inflation and credit growth are improving purchasing powers of the consumers. Moreover, expansionist investment and monetary policies introduced by the Government and the Bangko Sentral ng Pilipinas would further reinforce consumers’ confidence and increase GDP growth rate up to 6.9% by the end of the year 2017.

However, owing to the downside risks, such as the rise in global interest rates, which would lower the value of the peso against foreign currency; controlled capital inflows to the country and passive inflation rate – world bank expects that the growth rate shall remain the same for the next two years.

Increased Bank lending is the main catalyst for the expansion of the retail sector in the Philippines. Statistical data reported by the Bangko Sentral ng Pilipinas (BSP) in May 2017 reflected that while overall bank loans have grown at 19.2% during April 2017, individual or consumer level loans have expanded at 24.3% during that month. The report also said that expansion in credit card loans, salary-based loans and general-purpose loans have a direct impact on an increase in household consumption and ultimately in the expansion of retail and trade industry in the Philippines.

This retail expansion shall provide a greater opportunity for Small and Medium-Sized Entities (SMEs) in the Philippines to thrive and prosper. SMEs can be developed to become large suppliers of consumer products or even work as retail outlets for manufacturers and wholesalers. Department of Trade and Industry (DTI) also considers the growth of SMEs as a major factor in the prolonged economic growth of the country. Hence, it is promoting the agenda of SME development quite vigorously.

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