Jun 26, 2017

Philippines market snapshot: Consumer economy drives steady growth

Nielsen provides insights into Philippines' economic outlook and retail backdrop.

Philippines market snapshot: Consumer economy drives steady growth

Nielsen provides insights into Philippines' economic outlook and retail backdrop.

Philippines continues to be one of the growth engines in Southeast Asia with the economy performing in the top three, just behind China and Vietnam. The Philippine economy continued its robust performance in Q4 2016, growing 6.5 percent on the back of strong investment and consumption. 

Its growth in recent years has gone hand in hand with job creation and poverty reduction.  Although growth slowed in Q4 2016 compared to the previous quarter, it was higher at the same period a year ago. The second half of an election year in the Philippines is usually slower than the first half due to the transition of government and investors adopting a “wait-and-see” attitude.  Philippines is expected to remain a top regional performer with growth projected at 6.9 percent in 2017 and 2018, according to the World Bank.

Meanwhile, consumer confidence has not changed significantly throughout 2016 and remains high at 132 points, the second highest in the world. Inflation continues to be viewed under control despite the weaker peso which is inching up toward 50 pesos against the dollar. The weaker exchange rate increases remittance money to families from overseas workers as well as companies which are in the business process of outsourcing space. Consumers are optimistic about job prospects and personal finances in the next 12 months with three in five consumers believing it is a good time to buy the things they want and need after taking the cost of living and personal finances into consideration.

Filipino consumers are young, engaged and eager. Consumers are increasingly buying consumer goods as well as travelling, eating out and purchasing more discretionary items.

Filipinos seek convenience as evidenced with the growth of small store formats such as convenience stores in modern trade and traditional sari-sari outlets. With many new stores emerging in residential areas, small format stores are meeting consumer demand for real time convenience and proximity shopping.

Looking ahead, the government is embarking on ambitious reforms to deliver equitable tax reforms, enhance market competition, and improve the ease of doing business.  It is also continuing to prioritise public investments in infrastructure and social services. Crucial support is being extended to the agriculture sector where the majority of low income households reside.  The Philippine Rural Development Project (PRDP), started in 2015 in conjunction with the World Bank is also helping to raise rural incomes, enhance farm and fishery productivity, and improve market access throughout the country. With over 50 percent of the country’s population still living in rural areas in 2025, support in rural areas is critical to stimulate domestic consumption.

Continuous strong foreign direct investment suggests that despite some concerns about the changing political agenda, investors see the Philippines as a stable place to do business supporting further infrastructure and business investment.



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