RP manufacturers brace for worst Christmas in years
The Philippine Star 12/12/2005
Philippine retailers and manufacturers are bracing for their worst Christmas in years with Filipino consumers spending much less despite record pre-holiday cash transfers from relatives abroad, according to economists.
Manila-based University of Asia and the Pacific vice president Bernardo Villegas blamed political uncertainties as well as soaring oil prices for the descent of the spirit of Scrooge over Christmas.
Villegas said major industry players are reporting sales volume declines of between 5.0 and 10 percent as they approach what is normally their peak season when this overwhelmingly Roman Catholic nation of 84 million normally opens its purse strings to splurge on gifts and consumer items.
However, shopping mall traffic in Metro Manila, which accounts for nearly a third of the country's domestic economic output, has been noticeably sparse, with the parking lots of giant malls nearly empty.
"Practically all consumer goods are suffering sales declines," Villegas, a prominent economist, told a news conference.
"We will have a bleak Christmas. We will not have the usual big increase in sales," he said. "If you talk to retailers, they have very sad faces."
Even in the provinces, trade and industry officials have noticed a distinct change in spending habits in the run-up to Christmas.
Merly Cruz, a regional trade and industry director in Davao City, told a business newspaper that people are buying less and "showing a preference for inexpensive items" this year.
The dismal sales figures are being chalked up even as the eight million-plus Filipinos living or working abroad are driving the peso to their highest levels this year with annual salary remittances expected to top the $10-billion mark.
This amount is equivalent to more than 10 percent of the Philippine gross domestic product.
Villegas said consumer research surveys indicate that "Filipinos are afraid of the future and they are saving more."
These surveys also indicate they are spending a bigger fraction of their incomes on transport and energy-related expenses "for obvious reasons," he added, referring to substantially higher oil and power rates.
Villegas said the retail malaise has been noticeable for the past 18 months in the aftermath of the bitterly disputed May 2004 presidential elections, in which President Arroyo was accused of cheating but survived an impeachment complaint last September.
In general, Villegas said Filipinos are also "abstaining from eating at fast food restaurants in order to buy more (mobile phone) cell cards," a development which also "has had a negative influence on consumer spending."
Nevertheless, he said the country's top retailers continue to build giant shopping malls because "they are seeing this as a temporary phenomenon."
Luz Lorenzo, an economist with ATR-Kim Eng Securities Inc, said there was "anecdotal evidence" to suggest spending patterns have changed although she was more optimistic than Villegas.
"The government does not produce retail spending data so the only evidence we have to go on is what we actually see for ourselves. Although shopping malls appear to be quite full we have found there has been a proliferation of flea markets in the past year.
"These markets appeal to a cross section of people as they provide a wide variety of goods at cheap prices."
Henry Sy, founder of the leading SM chain of shopping malls, told The STAR in a rare interview recently: "I'm optimistic about the year 2006 for the Philippine economy, especially for tourism growth potential."
His daughter Teresita Sy, who runs her father's vast empire, added: "Our family is confident the new year will be better for the Philippine economy, notwithstanding the troubles in politics."
Villegas said he expects Philippine GDP to muddle through this year and next, helped by a possible shift toward a parliamentary form of government and new national elections in 2006 or 2007 that would give Arroyo a "graceful exit" and lift the gloom on the retail sector.
However, the projected GDP growth of less than six percent annually over the next six years is "not good enough" with Philippine neighbors growing at a faster clip.
"If we don't grow at least six to nine percent like our neighbors we will never be able to overcome the poverty that we are experiencing now," he said, adding that a 7-8 percent growth over the next 10 years would be the minimum requirement. — AFP