Surging remittances, robust BPO industry keep economy strong against Euro crisis

Crisis obstructing huge part of Europe is affecting the country but its effects are cushioned by the very strong domestic economy brought about by many factors, the Bangko Sentral ng Pilipinas (BSP) said.

Assistant governor for monetary stability sector Cyd Tuaño Amador said the Philippines’ good trade, remittances, balance of payments and even inflation figures are enough to cushion the impact of the European crisis, particularly in Portugal, Ireland, Greece and Spain or Pigs.

“What matters most is our domestic sources are solid because private consumption and public investments are growing so steadily. No need to worry for Filipinos,” Amador told The Daily Tribune.

She said remittances alone are enough indication that the Philippines is not severely affected because it only shows the job opportunities of Filipinos abroad remain unhampered. Remittances of Filipinos sent from various countries reached $2 billion for July 2012 alone, according to the BSP data.

The very effect of high dollar remittances from Filipinos abroad is seen on the very strong peso, according to Amador.

Peso opened at 41.73-$1 yesterday at the Philippine Dealing System.

The range is well within the peso average for the past several weeks.

Another sector that helps the Philippines very consistently, according to her, is the business process outsourcing (BPO) sector.

As of Sept. 15, the association of BPO firms in the Philippines said the sector now employs more than 600,000.
Amador said the experiences in many European countries have never happened here, particularly in job losses and debt-to-gross domestic product (GDP) ratio.

She said in Greece alone, the debt to GDP ratio now 50 percent. The Philippines only has 24 percent debt-to-GDP.
“You don’t see people here queuing in line looking for work. There, it’s a common scenario because life is so hard,” she said.

The crisis, now affecting 16 European countries, started when many nations defaulted in loan payments.

The defaults occurred after the loans they obtained were not used in investing in public infrastructure but in paying social security and pensions of retirees. –Ed Velasco, Daily Tribune