Driving growth

THE latest data on overseas Filipino worker (OFW) remittances should dispel concern over a possible economic slowdown in the fourth quarter of this year.

According to the Bangko Sentral ng Pilipinas (BSP), money sent home by OFWs hit $1.7 billion in the first month of the fourth quarter. This is the biggest amount sent so far this year, even as the economic recovery of OFW- host markets remain fragile.

The Philippine stock market in recent days has been dipping on concern over news overseas, such as the likely cut in the credit score of Portugal.

The euro zone is not yet out of the woods, even after the International Monetary Fund led a bailout of Ireland last month. Besides Portugal, neighboring Spain is also on the radar screen of many investors as a possible dampener.

The Irish bailout comes months after a similar action to save Greece, which likewise had been suffering from fiscal difficulties.

But as in previous economic crises, OFWs, far from cutting their subsidy, in fact hiked their remittances to loved ones back home.

The bulk of remittances came from the US, Canada, Saudi Arabia, Japan, the UK, United Arab Emirates, Singapore, Italy, Norway and Germany. Remittances from these areas represented 84 percent of the total amount reported by the banks.

Preliminary data from the Philippine Overseas Employment Administration showed that approved job orders so far this year reached 578,535, of which about 39.2 percent were for service, production, professional, technical and related workers. The majority of the approved job orders was for sites in Saudi Arabia, UAE, Kuwait, Hong Kong and Taiwan.

OFW money in the first 10 months already reached $15.5 billion, closing in to the $18-billion full-year forecast made by the BSP.

As the Philippine economy posts its first full-year recovery from the global financial turmoil, consumer spending is again poised to drive the domestic economy.

The robustness of consumer spending would likely offset the winding down of government spending in light of the Aquino administration’s fiscal straits.

Indeed, sales of property and auto firms are on an upswing, offsetting the maturing telecom market, which was one of the initial beneficiaries of the remittance inflows.

In the property sector, stock market analysts are already talking of a second bull run, as companies cash in on projects in the pipeline come 2011.

In the auto industry, key players expect a return to pre-Asian crisis sales.

The BSP earlier said consumer confidence hit a record high for the fourth quarter. While the confidence index remains in negative territory, the improvement points to the decline in the number of pessimists.

In short, we’re likely to see a banner year for the economy in 2010, and this augurs well for the coming New Year. –Manila Times