Traditional retailers GDP contribution expected to reach 20% in 2024

The Philippine retail sector is poised to play a more significant role in the country’s economic landscape, with its contribution to the gross domestic product (GDP) expected to rise to 20 percent as early as this year. This optimistic outlook was shared by Roberto Claudio, President of the Philippine Retailers Association (PRA), during the National Retail Conference and Expo 2024, which concluded on August 30.

Claudio highlighted the steady growth of the retail industry’s share in the national economy, which stood at 18.6 percent in 2022. "The GDP contribution of retail has been going up at least 1 to 2 percent a year," Claudio noted, projecting that the sector could achieve the 20 percent mark by the end of 2024 or early 2025.

In terms of government revenue, the retail sector has been a consistent contributor, generating an average of PHP750 billion annually in taxes from 2017 to 2022. However, Claudio pointed out a disparity in the tax obligations between traditional brick-and-mortar stores and online marketplaces, the latter of which are currently exempt from value-added tax (VAT) in the Philippines. This exemption allows online retailers, particularly those importing goods from countries like China, to price their products up to 17 percent lower than those of local physical stores.

Claudio expressed concern over this uneven playing field, noting that it disproportionately benefits foreign retailers and poses a significant challenge to local businesses. He urged the government to expedite the implementation of the Internet Transactions Act, which would impose taxes on online sales and help level the competitive landscape between physical and digital retail platforms.

With the anticipated growth in its GDP contribution, the retail sector remains a crucial driver of economic activity in the Philippines. However, Claudio’s call for regulatory changes underscores the need for a fair and balanced environment that supports both traditional and online retailers in contributing to the country’s economic progress.