Remittances seen setting new record this year

MANILA, Philippines–Overseas Filipino workers (OFWs) are expected to send home more money than expected in the closing months of the year, encouraged by the weak peso that puts more cash in the pockets of their families in the country.

Metropolitan Bank & Trust Co. said this added motivation would add on to the usual acceleration in remittance flows during the holiday season. Higher remittances should give a boost to economic activity, which has slowed in recent months.

“Expect remittances to end on a strong note given the holiday season and as the weak peso supports the purchasing power of recipients,” Metrobank said in a note to clients.

“Despite the uneven outlook for global growth, remittances are likely to remain robust as demand for Filipino manpower continues to be strong,” the country’s second-largest bank said.

Metrobank sees total remittances for 2014 to be 6 to 7 percent higher than the level last year.

Metrobank’s forecast is better than the Bangko Sentral ng Pilipinas’ (BSP) official projection of a 5.5-percent increase to a record high of $24 billion this year.

Data released this week showed that for October alone, remittances rose by 7 percent to $2.22 billion—the highest level in any single month on record.

The previous record was set in December last year when money sent home by Filipinos overseas reached $2.17 billion.

This brought remittances to a total of $19.87 billion from the start of the year to the end of October, growing by 6.2 percent from 2013 levels. For all of 2014, the government forecasts a 5.5-percent growth in remittances to a new record of $24 billion.

Last year, remittances accounted for about 8 percent of the country’s gross domestic product (GDP).

Apart from providing support to domestic consumption, remittances also account for more than half of the country’s recurring income from abroad.–Paolo G. Montecillo