The growth in money sent home by migrant workers may be sustained through 2014 despite coming from a higher base as global economic conditions improve, leading to an increase in demand for skilled Filipino labor.
The Bangko Sentral ng Pilipinas (BSP) likewise said that the official projection for this year would likely be breached as overseas Filipino workers (OFW) with relatives in storm-ravaged areas send in more cash to pay for reconstruction.
“It actually looks like we will exceed the projection of 5 percent growth,” BSP Governor Amando M. Tetangco Jr. said late last week.
Year-to-date cash remittances at the end of September totaled $16.48 billion, 5.8 percent higher from that of last year, data from the BSP showed.
“The reports we get indicate that there’s been an increase. It’s not easy to segregate [what] is due to the disaster and how much is due to seasonal factors,” Tetangco said, citing a trend of higher remittances in the fourth quarter of the year.
He likewise noted that, in the past, remittances have usually grown above what would be considered normal rates in the months following any major disaster. This was seen following Tropical Storm Ondoy and Typhoon Pepeng in 2008, which caused massive flooding in Metro Manila and Northern Luzon, respectively.
After growing at an average of 5 to 6 percent for most of the year, the increase in remittances surged to about 11 percent a month following the two weather disturbances, Tetangco said.
The same would likely be seen in November and December as OFWs send more money than usual to their families to finance the rebuilding of destroyed homes.
He said the BSP would also stick to the 5-percent forecast for 2014, citing the improvement of economic conditions in countries where OFWs are based.
Tetangco said the growth in remittances over the years has also been driven by improvements in the ability of local banks to make it more convenient for OFWs to send cash home.
Remittances from the country’s stock of eight to 10 million OFWs are considered the main fuel for domestic consumption—the Philippines’ main economic growth engine.
Consumer spending currently makes up 70 percent of the country’s gross domestic product (GDP), which grew by 7 percent in the third quarter of 2013.
Money transfers from OFWs are also the country’s main source of foreign exchange, contributing to a structural surplus in the Philippines’ dollar income that shields the economy from external shocks.