Metrobank, UA&P see higher remittances, 2.2% GDP growth

MANILA, Philippines – The Metrobank Group and the University of Asia and the Pacific (UA&P) are expecting a 3.5-percent increase in remittances this year despite the global economic slowdown.

In a report titled “The Market Call Capital Markets Research,” Metrobank’s First Metro Investment Corp.(FMIC) and UA&P said that strong remittances would help the Philippines register a gross domestic product (GDP) growth of 2.2 percent this year.

The study said that remittances from overseas Filipino workers (OFW) would likely increase by 3.5 percent, or about $574 million, to almost $17 billion this year from a record $16.4 billion last year.

The Bangko Sentral ng Pilipinas has revised upwards its projected growth in remittances to at least three percent from zero percent after inching up by 3.8 percent to $10 billion from January to July.

Data from the central bank showed that money sent home by Filipinos abroad posted its highest year-on-year growth of 9.3 percent in July to $1.5 billion on the back of sustained demand for Filipino manpower worldwide.

“Given the resiliency of OFW dollar remittances in the first seven months, highlighted by an impressive 9.3 percent jump in July, we are revising upward our forecast for the whole year to a positive 3.5 percent growth,” the report said.

“Although there had been lay-offs, demand for Filipino migrant workers continues to be sustained. Moreover, hiring agreements are presently taking effect. As such, the lay-offs were being offset by new jobs being taken up by our OFWs,” the study added.

Due to robust remittances that would continue to boost consumption, FMIC and UA&P see the country’s GDP expanding by at least two percent in the third quarter and 4.2 percent in the fourth quarter.

This would bring the full-year GDP growth to 2.2 percent or slightly lower than the earlier projection of 2.4 percent. The revised forecast was higher than the government’s GDP growth projection of between 0.8 percent and 1.8 percent this year.

The country’s GDP grew by one percent in the first half of the year from four percent after the country’s domestic output expanded by 1.5 percent in the second quarter and by 0.6 percent in the first quarter.

“Our outlook has mellowed only mildly. GDP growth in the third quarter is likely to barely exceed two percent. But we expect a more robust export demand and early election spending to boost GDP by 4.2 percent in the fourth quarter, and lead to a full-year average of 2.2 percent,” the study said.

FMIC and UA&P see inflation increasing to 0.7 percent in September, 1.5 percent in October, 2.4 percent in November, and 3.8 percent in December due to rising crude oil prices. –Lawrence Agcaoili (The Philippine Star)