Remittances seen to provide growth boost

GROSS domestic product (GDP) growth could hit 5.7% this year as strong influx of money from overseas Filipinos workers (OFWs) supports the consumption-driven Philippine economy, HSBC said in a research note released yesterday.

Remittances jump 7.6% in AugustRemittance growth on targetRemittances sustain uptrend in JulyRemittances seen as service sector growth driverRemittance growth slows in June

“The acceleration of remittances is much stronger than expected, underpinning robust demand for Filipino workers as well the resilient nature of OFWs and their professions,” the bank said.

Filipinos working abroad sent home $1.797 billion in August, up by 7.6% from the same month last year.

The increase was the biggest since November last year when remittances grew 10.6%.

Remittances totaled $13.733 billion in the eight months to August, 5.5% more than the $13.021 billion notched in the same period in 2011 — in line with the central bank’s 5% growth projection for the year.

The continued surge of remittances will fuel robust private consumption in the third quarter, HSBC said.

Coupled with healthy public spending, which will support infrastructure and investments, these gains could offset the sharp contraction of exports, it explained.

The government spent P126.885 billion in August, a 10.4% hike from the year before. This took the eight-month tally to P1.085 trillion, 14.5% more than the P947.244 billion spent in the same period in 2011. Exports, on the other hand, fell by 9% to $3.8 billion from $4.17 billion in August — the weakest performance in eight months.

“Growth, therefore, is expected to reach the government’s 5-6% target,” HSBC said.

The global banking giant also expects inflation to remain benign this year, settling at the “midrange of the 3-5% target” set by the Bangko Sentral ng Pilipinas.

But inflationary risks are on the upside, it warned, and the rise in prices of consumer goods will likely pick up in the first quarter of 2013 due to the anticipated economic recovery of China. — D. C. J. Jiao, Businesworld