Remittances from overseas Filipino workers (BSP) will continue to flow into the country, despite geopolitical tensions that may threaten the livelihood of workers in the Middle East, the Bangko Sentral ng Pilipinas (BSP) said.
BSP Deputy Governor Diwa C. Guinigundo said past crises have shown that OFW remittances, one of the main driving forces behind domestic consumption that contributed 70 percent to domestic output, were conflict-proof.
He noted that during times of crisis overseas, particularly in areas where large concentrations of OFWs, most analysts forecast possible declines in remittances.
Guinigundo said this was seen during the Gulf War in the early 90s and during the start of the United States’ “war on terror” after the Sept. 11 attacks by Al Qaeda.
He said many forecasts also showed that remittances would decline at the start of the global financial crisis in 2008.
“But instead of dropping, remittances continued to grow,” Guinigundo said in an interview.
The BSP expects remittances from OFWs to grow by 5 percent to $22.5 billion this year. Latest data showed that cash remittances grew by 5.6 percent to $10.7 billion in the first semester of 2013. Remittances sent by at least eight million OFWs are the country’s largest source of dollar income.
The top sources of remittances are Saudi Arabia and the United Arab Emirates in the Middle East, the United States, Singapore, Canada, and Japan.
Remittances from these countries made up three-fourths of the total as of the end of the first semester, the BSP said.
Another factor contributing to the sustainability of remittance flows is the fact that 75.1 percent of OFWs have long-term employment contracts.
Other major sources of dollar income for the country are the business process outsourcing (BPO) sector and the tourism industry.