9% growth in OFW remittances seen

MANILA, Philippines – Investment bank Barclays Capital expects the strong growth in the amount of money sent home by Filipinos abroad to be sustained this year on the back of the steady demand for skilled workers as well as the continued recovery of the global economy.

In a study entitled “Philippines: Robust remittances; remain constructive on Philippine peso,” Barclays Capital economist Prakriti Sofat said remittances from overseas Filipino workers (OFWs) would grow nine percent to about $20.5 billion this year.

“We project remittances to total $20.5 billion in 2011, up nine percent on 2010. Rising deployment and robust growth across the region are expected to underpin remittances,” Sofat stressed.

The forecast of Barclays Capital on OFW remittance growth this year is more optimistic than the eight percent growth forecast set by the Bangko Sentral ng Pilipinas (BSP).

The BSP reported earlier that OFW remittances grew 8.2 percent to a new record level of $18.76 billion last year from $17.35 billion in 2009 due to the strong demand for skilled Filipino workers as well as the expansion of overseas remittance centers. The growth rate exceeded the revised eight percent growth forecast set by the BSP for remittances last year.

Data showed that OFW remittances hit a new monthly record high of $1.694 billion after posting a growth of 8.1 percent in December from $1.567 billion in the same month in 2009. The amount erased the previous monthly record of $1.673 billion booked in October last year.

Remittances last year accounted for about 10 percent of the country’s total domestic output as measured by the gross domestic product (GDP) and at the same time provided strong support to domestic demand.

Major sources of remittances last year include the US, Canada, Saudi Arabia, Japan, United Arab Emirates, Singapore, Italy, Germany and Norway.

Statistics released by the Philippine Overseas Employment Administration (POEA) showed that approved job orders increased 15 percent to 624,045 while land-based workers classified as new hires with processed contracts awaiting deployment went up by 16.6 percent to 423,271 last year.

For the month of January alone, the POEA managed to process 16.9 percent or 7,822 of the total 46,238 job orders. The processed job orders comprised mainly of services, production, professional, technical and related job categories in Saudi Arabia, Qatar, UAE, Kuwait, Taiwan and Hong Kong.

Likewise, the continuing efforts to improve on the variety and coverage of the global remittance networks enabled OFWs to send remittances using more innovative financial services offered in the market including web-based service, automated teller machines (ATMs) as well as reloadable or reusable money or cash cards.

Robust OFW remittances helped the Philippines book a strong external payments position last year resulting to a credit outlook and rating upgrade from Standard & Poors and Moody’s Investors Service.

The country’s gross international reserves (GIR) surged 36.8 percent to a record $62.371 billion last year from $45.03 billion in 2009. For the month of January, the country’s foreign exchange reserves jumped 39.5 percent to a new all-time high of $63.61 billion from $45.591 billion in the same month last year.

The GIR, the sum of all foreign exchange flowing into the country, is expected to range between $68 billion and $70 billion this year.

On the other hand, the country’s balance of payments (BOP) surplus more than doubled to hit a new record level of $14.4 billion last year from $6.42 billion in 2009 amid the strong recovery of the export sector as well as robust remittances from Filipinos abroad.

The BOP, which refers to the difference of foreign exchange inflows and outflows on a particular period and represents the country’s transactions with the rest of the world, is expected to post a surplus of between $6 billion and $8 billion this year.

The country’s strong external payments position continued to provide the Philippines with comfortable buffers against possible external shocks and helped ensure our external debt sustainability. –Lawrence Agcaoili (The Philippine Star)