Election spending drives retail sales

CEBU, Philippines — The retail business is expected to get a boost as the peak of the election season approaches.

Cebuano businessman Robert Go, who is president of the Philippine Retailers Association in Cebu, said the money seen to circulate due to election-related spending will drive up retail sales.

"Election usually drives up retail sales because of the increase i

n money circulation given by politicians," Go told The FREEMAN in a phone interview.

He said political candidates holding campaign events in various barangays are also driving demand for goods and services.

For this year, he noted the retail food sector in particular may see as much as 10% growth.

"Retail sales are expected to go up as the election nears and a few days after that," said Go, who owns a supermarket chain based in Cebu.

In particular, he cited the expected rise in demand for some food items and bottled water which are usually used in campaign events of candidates.

He pointed out that economic growth in an election year is usually higher.

"That is because of the expenses made by politicians. Money flow goes up," he said.

This Philippine economy may see stronger growth this year, with election spending projected to boost domestic consumption.

Overall spending activity was seen to pick up ahead of the May 2019 midterm elections.

Consumer spending — which is widely estimated to contribute 70% to overall economic growth — increased by a slower 5.6% last year as inflation surged to a decade-high 5.2%, with a nine-year peak of 6.7% seen back in September and October.

But price growth has since returned to to the 2-4% target range this year on the back of moderating global oil prices.

In its recent economic update report, the World Bank said for 2019, it expects consumption growth to recover to 5.9% and even strengthen to 6% next year as inflation eases, and amid more remittance inflows and with new jobs available in the country. Election-related expenses should also support faster expansion, the Washington-based lender said.

With the expected increase in consumption as a result of the 2019 elections, gross domestic product (GDP) growth may exceed the growth in the previous two years.

In 2018, Philippine GDP growth hit 6.2%, missing the government's target. (FREEMAN)