The Philippines is no longer heavily dependent on foreign remittances as shown by the consistent faster growths in the value of goods and services produced within the country as compared to the increments in the income from abroad, the National Economic and Development (Neda) said.
Dr. Rosemarie Edillon of the Neda-National Planning and Policy Staff (NPPS) said since 2011, the country’s gross domestic product (GDP) has been outpacing the growth of gross national income (GNI), indicating better performance for the Philippine economy.
GDP measures the value of goods and services within the country, while the GNI incorporates net primary income from abroad that includes remittances.
“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 that period. 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,” Edillon said.
In the past, Edillon said data from the National Statistical Coordination Board showed that income from abroad outperformed GDP.
In 2010, for instance, GDP grew 7.6 percent while the net primary income grew 10 percent.
The trend, however, started to reverse in 2011, she said, with net primary income growing by only 1 percent compared to GDP growth of 3.9 percent.
“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’s GDP growth has been higher than its net primary income from abroad,” said Edillon.
Despite this, Edillon said the Philippines would not be totally independent from money sent from abroad, “as remittances continue to be a significant source of investments.”
Remittances from overseas Filipino workers (OFWs), for instance, are significantly contributing to human capital development, since a portion goes to the education of family members.
Also, Edillon said returning Filipinos from abroad become new breed of entrepreneurs when they come home as they invest their income in small businesses. “They are a source of technology transfers as well.”
She added that the government, through the Bangko Sentral ng Pilipinas, has been extending financial literacy programs to overseas Filipinos and their families, so that remittances are channeled to the right investments and not to conspicuous consumption.
“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. 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,” said Edillon. –MAX V. DE LEON / REPORTER, Businessmirror
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