Goldman Sachs expects remittances from Filipinos overseas to grow 10 percent year-on-year this year, but they will be outpaced by revenues from the business process outsourcing in a few years.
Remittances accounted for about 11 percent of the country’s gross domestic product in 2009, a figure that may be eclipsed by BPO exports in the future, the global investment banking and securities firm said.
The investment bank said remittances and information technology exports, especially BPO revenues, were now supporting the country’s balance of payments position, contributing to the appreciation of the peso.
“Robust flows, strong business sentiment and higher election-related spending are likely to support growth in 2010, despite a weak, El Niño-affected agricultural crop. We expect GDP to grow 4.2 percent in 2010, higher than 0.9 percent in 2009. The consensus is expecting 3.7-percent growth,” it said.
Goldman Sachs said remittances held up well despite the crisis last year and supported private consumption. “We expect remittances to continue to remain strong and supportive of growth and the peso,” it said, noting the broad distribution of Filipino workers across the cyclical production and the less-cyclical service sector.
It also cited a balanced distribution of Filipino workers across regions, the employment agreements signed with various host countries, continued expansion of financial centers and products to meet overseas foreign workers.
High oil prices, which bode well for remittances from the Middle East and strong global growth, are likely to support remittance flows. — Roderick T. dela Cruz, Manila Standard Today