Economy now relies less on OFW remittances

The National Economic and Development Authority is saying that the Philippine economy is becoming less dependent on remittances from overseas Filipino workers in the past three years.

Rosemarie Edillon, NEDA National Planning and Policy Staff director, said that the Philippines’ net primary income, or the difference between the money received abroad and the money paid abroad, has been declining as seen in the gross national income (GNI).

“Whenever our growth in net primary income is higher than GDP, it means that we are heavily relying on remittances. But in the past few years, the Philippines’ GDP growth has been higher than its net primary income from abroad,” Edillon said in a statement yesterday.

The GDP, or gross domestic product, measures the value of goods produced and services generated in the country while the GNI includes net primary income from abroad, including remittances.

Data from the National Statistical Coordination Board showed that in 2010, the GDP grew by 7.6 percent, while the net primary income expanded by 10 percent.

However, Edillon said that in 2011, this started to change, with the net primary income increasing by a mere one percent as against the GDP growth rate recorded for the said year at 3.9 percent.

“For the first quarter this year, GDP grew 6.3 percent, while net primary income only grew 1.7 percent. While net primary income rebounded to 4.5 percent in the second quarter, it is still lower than the 5.9 percent GDP growth for the said period,” Edillon said.

“In the economic profile, we are seeing the case where our GNI growth is actually less than our GDP growth, which is a good thing,” she added.

Edillon noted during the round table discussions on the “Political Economy of Philippine Labor Migration” at the Ateneo de Manila University that migration is a global issue of demand and supply among countries with different levels of development.

“While the Philippine economy is still considered as developing, it is already in a high stage of human capital development. On the other hand, there are developed countries that require a certain level of human capital, which the Philippines has been able to supply,” she said.

Edillon said that while the Philippine economy has been less dependent on OFW remittances, the country will also not be totally independent from money received from abroad as it will continue to be a significant source of investments.

“I think the global demand would always be there. Zero dependence on remittances is probably very ambitious. In reality, overseas remittances are a significant part of a country’s economy, whether developed, developing, or at any stage of economic development,” she said.

“What we want to happen is that economic development in the country will be inclusive, where all segments of our society especially the poor benefit,” she added.

Edillon said that the government recognizes the important role of overseas Filipinos in attaining inclusive growth, since the remittances are a significant source of human capital development.

“At the household level, remittances are used to finance human capital investments. A portion goes to the education of family members. Returning Filipinos from abroad also bring into our country a new breed of entrepreneurs. They are a source of technology transfers as well,” Edillon said.

She added that the Bangko Sentral ng Pilipinas has financial literacy programs for OFWs and their families, so that their money is placed in the right investments.

“The inflow of remittances is about 30 percent the earnings of our exports sector, in nominal terms. In fact, it is even higher than the foreign direct investments that we are getting,” Dillon said.

“Because of remittances, our country’s international reserves have been at comfortable levels, and this implies less vulnerability of the country to external shocks, lesser reliance on foreign savings, and availability of more currency that will help our country service its debts and pay its imports. This is why we have to protect our remittances, which are hard earned by our countrymen abroad,” she added. –ANGELA CELIS, Malaya