OFW families turning to savings and investments

MANILA, Philippines – Beneficiaries of remittances from overseas Filipino workers (OFWs) are turning to savings and investments to survive the uncertainty brought about by the global financial crisis, data from the Bangko Sentral ng Pilipinas (BSP) showed.

BSP Deputy Governor Diwa Guinigundo said in an interview with reporters that the percentage of households that allocated portions of their remittances to savings and for investments has steadily been increasing over the years.

Guinigundo pointed out that the central bank’s Consumer Expectations Survey (CES) showed that percentage of households that allocated portions of remittances from OFWs increased to 44.8 percent in the fourth quarter of the year from 39.9 percent in the third quarter and from only seven percent in the first quarter of 2007 when the quarterly survey was started.

“This is very important. That means OFWs are becoming more financially literate and conscious that what they are earning overseas would have to be saved which is precisely what is happening now,” Guinigundo stressed.

According to him, families of OFWs have realized the importance of savings and investments especially after the financial crisis struck the US late 2008 that rippled across the globe resulting in a worldwide economic slump.

“Their families here are realizing the importance of savings and investment and this is something that has added resiliency to OFW remittances throughout the two years of global slowdown,” Guinigundo said.

He explained that OFW remittances inched up by 4.2 percent in the first nine months of the year despite the projected decline by economists and analysts.

“The expectation was a 20-percent to 30-percent decline in remittances but in first nine months it has improved by about 4.2 percent so there is resiliency,” he added.

Latest data showed that OFW remittances amounted to $12.789 billion from January to September or $516 million higher than the $12.273 billion registered in the same period last year.

The BSP is now looking at a four percent growth in OFW remittances to a record level of $17.1 billion this year from $16.4 billion last year.

The BSP which was originally looking at a zero growth in the amount of remittances said the revised outlook would be supported by the steady deployment of Filipino workers abroad and the increase access to formal remittance channels through the establishment of more remittance centers and tie-ups abroad.

Next year, the BSP sees remittances increasing at a faster rate of six percent due to the global economic recovery.

Due to robust remittances, the BSP revised upwards the projected gross international reserves (GIR) to a range between $43 billion and $44 billion as well as the balance of payments (BOP) position to a surplus of $4 billion to $5 billion this year.

The GIR is the sum of all foreign exchange flowing into the country while the BOP is the remaining balance net of all external payments for debt servicing and imports. –Lawrence Agcaoili (The Philippine Star)