Philippines Retail Report for First Quarter of 2011: Forecasted That the Country's Retail Sales Will Grow From a Forecast PHP1.40 Trillion (US$31.42 billion) In 2011

The report below is from Business Monitor International


"The Philippines Retail Report provides industry professionals and strategists, corporate analysts, retail associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the Philippines' retail industry.

The First Quarter of 2011 forecasts for Philippines Retail Report indicates that the country's retail sales will grow from a forecast PHP1.40 trillion (US$31.42 billion) in 2011 to PHP1.65 trillion (US$37.06 billion) by 2014. Strong underlying economic growth, an expanding population (especially in urban areas), rising consumer spending and the continued development of organized retail infrastructure are the key factors behind the forecast growth in the Philippines retail sales.

The Philippines nominal Gross Domestic Product (GDP) is forecasted to reach US$193.0 billion in 2011. Average annual GDP growth of 4.5% is predicted by Business Monitor International (BMI) through the year 2014, reaching US$275.65 billion. With the population expected to increase from an estimated 95.5 million in 2011 to 100.9 million by 2014, GDP per capita is forecasted to rise by more than 35% by the end of the forecast period, reaching US$2,732. Our forecast for consumer spending per capita is for an increase from US$1,439 in 2011 to US$1,931 by 2014.

Although salaries in the Philippines remain low, the report forecasts the 2011 average annual wage at US$1,924, Household incomes are substantially bolstered by contributions from family members working overseas. Total remittances into the country rose by 7.1% year-on-year (y-o-y) over the first seven months of 2010, bringing the total to US$10.68 billion, up from US$9.97 billion in the same period of 2009. The government forecasts remittances to grow by an annualized 6-8% for the full year. With the majority of remittances going into consumption rather than investments, the retail industry is one of the beneficiaries. In urban areas in particular there are also increasing numbers of dual-income, middle-class families and young professionals who are boosting retail sales.

The country's growing youth population represents a key element of future retail spending.  According to UN data, 36.7% of the Philippine population was in the 20-44 age range in 2005. This is forecast to increase to nearly 39% by 2015. The proportion of the population classified by the UN as economically active was 60.9% in 2005 and should rise to almost 63% by 2015. The urban population, which accounted for 62.6% of the total in 2005, is predicted to reach nearly 70% by 2015. About 50% of the country's total retail sales are concentrated in the Manila metropolitan area.

Consumer electronic sales are forecast to be worth US$4.35 billion in 2011, according to BMI data, rising to US$5.05 billion by 2014 (16.2%). This sub-sector has significant growth potential, with BMI projecting a Compound Annual Growth Rate (CAGR) of 9% between 2010 and 2014, one of the highest in the region. There is a relative lack of penetration in key product categories, with PC penetration of less than 10% and LCD TV penetration of less than 1%."