Gov’t may stick to remittance growth projections

MANILA, Philippines–Economic managers are expected to stick to their projections on remittances, despite the still-unexplained slowdown reported at the start of the year that may lead to worries over the sustainability of the country’s performance.

Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said balance-of-payments (BOP) assumptions are currently under review, with most eyes on migrant workers’ remittances—the largest source of foreign income for the economy.

“We need to look at additional data … to make a more solid assessment,” Tetangco told reporters this week.

The BOP is a summary of all transactions between the country and the rest of the world.

In January, cash transfers by overseas Filipino workers (OFW) totaled $1.81 billion—up just 0.5 percent year-on-year. The total was the lowest since February 2014, while the growth rate was the slowest since January 2009.

Apart from being the country’s major source of foreign exchange income, remittances from overseas Filipino workers (OFW) accounted for 8.5 percent of domestic output in 2014.

Official forecasts have remittances growing at 5 percent this year.

HSBC, in a note to clients this week, said several factors contributed to the slowdown in remittance growth. For one, a three-day holiday to celebrate Pope Francis’ visit to the country could have made it harder for people to send cash, HSBC analyst Trinh Nguyen said.

“The deceleration reflects a seasonal contraction and growth will likely normalize in the months ahead,” she said.

Bank of the Philippine Islands lead economist Emilion Neri Jr. said the collapse in fuel prices in recent months may have led to lower incomes for Filipinos working in oil-exporting countries in the Middle East.

With just one month in the books, BSP’s Tetangco said the latest report was inconclusive.

“It may not be enough basis to change the forecast for the year, so we need to get more information,” he explained.

For 2015, the BSP expects remittances to grow by at least 5 percent. Tetangco said projections for trade, investments, and income from other dollar-earning industries, such as outsourcing and tourism, were also up for review.