Think tank sees sustained private consumption growth

MANILA, Philippines — Barcelona-based think tank FocusEconomics is projecting a sustained expansion in private consumption, boosted by the steady remittance growth from overseas Filipinos.

Massimo Bassetti, economist at FocusEconomics, said private consumption would grow six percent this year before easing slightly to 5.9 percent in 2019.

Latest data from the Bangko Sentral ng Pilipinas (BSP) showed a steady growth in both personal and cash remittances from Filipinos abroad.

Personal remittances that include non-cash items that flow through both formal or via electronic and informal channels such as money or goods carried across borders went up 5.2 percent to $25.72 billion from January to October.

Cash remittances coursed through banks rose 4.2 percent to $23.06 billion.

Cash remittances from the US, UAE, Saudi Arabia, Singapore, Japan, United Kingdom, Qatar, Kuwait, Germany, and Hong Kong accounted for 80.2 percent of the total cash remittances in the first 10 months.

For 2017 and 2018, the BSP has set a four percent growth target for remittances that contribute nine percent of the country’s gross domestic product (GDP).

BSP Deputy Governor Diwa Guinigundo said Filipinos abroad took advantage of the strong US dollar, translating to higher remittances in October.

The peso remains the weakest currency in the region depreciating close to two percent year-to-date even breaching the 51 to $1 a few months ago due to the strong demand for the greenback.

“Remittances, which accounted for approximately 9.8 percent of GDP in 2016, are an important source of income for many Filipino families and thus one of the main drivers of private consumption,” Bassetti said.

Aside from boosting consumption, remittances together with business process outsourcing and tourism receipts also serve as a major source of foreign exchange buffer that help shield the Philippines from external shocks.