MANILA, Philippines - Cash remittances will likely increase by as much as seven percent this year over year-ago levels, the research arm of Metropolitan Bank and Trust Co. said.
“Research forecasts annual remittances’ growth this year to still be between six to seven percent, with an upside bias, amid prospects of more positive growth in some major OFW (overseas Filipino workers) host countries,” Pauline Revillas, research analyst at Metrobank, said in a research note.
The forecast is faster than the Bangko Sentral ng Pilipinas projection of a five percent expansion in cash remittances from the $22.968 billion recorded in end-2013.
Central bank data showed money sent home by Filipinos working and living abroad went up 5.8 percent to $11.422 billion as of June, from $10.8 billion in the same period in 2013. Bulk of these were sent from the United States, Saudi Arabia, the United Arab Emirates, the United Kingdom, Singapore, Japan, Canada and Hong Kong.
The BSP has traced the sustained inflows of remittances to the stable demand for skilled Filipinos abroad as well as to the continued expansion of banks’ remittance services abroad through tie-ups and establishments of facilities.
“The outlook supports our view that GDP (gross domestic product) will remain solid at six percent this year, driven by still robust spending and solid services sector,” Revillas said.
Remittances play a big role in supporting domestic consumption, which remains the biggest driver of the Philippine economy. Last year, remittances made up 8.4 percent of the country’s GDP.
“As a consumption-led economy, the strength of remittances continues to support economic activity,” Revillas stressed.
“With the sustained growth in the April to June period, remittances are expected to underpin second quarter GDP growth,” she noted.
The Philippine economy grew by a lower-than-expected 5.7 percent in the first quarter but the government kept its 6.5-7.5 percent target for the whole year. Official second-quarter GDP growth data will be released on Thursday.
In 2013, economic growth hit a stellar 7.2 percent, sustaining the faster-than-expected 6.8 percent in 2012.