Remittances to grow by 5% to P21B in 2012—BSP

MANILA, Philippines—Remittances are seen to further grow by 5 percent in 2012, as demand for Filipino labor by employers in various parts of the globe remains robust.

This is according to the Bangko Sentral ng Pilipinas, which said that money to be sent by migrant Filipinos may hit at least P21.105 billion in 2012 from the estimated P20 billion in 2011.

The 5-percent growth rate in remittances in 2012 would actually be a slowdown from the estimated 7-percent rise this year.

Quoting data from the Philippine Overseas Employment Administration (POEA), the central bank said the rising demand for Filipino workers in alternative labor markets compensated for the adverse impact on remittances by the weak US and eurozone economies.

Monetary authorities said remittances in 2012 would thus continue to support the consumption of Filipino households that has been one of the key drivers of the economy.

Latest remittance data from the BSP showed that money from migrant Filipinos amounted to $14.8 billion in the first nine months of the year, up 7.1 percent year on year.

The Philippines, with more or less 10 million Filipino migrants, is the fourth-biggest remittance-receiving countries, next to China, India and Mexico.

The BSP said remittances fueled growth of the economy so far this year, which grew by 3.6 percent in the first three quarters from a year ago. Economists said that if not for the rising remittances, which help consumer spending, the economy’s growth could have been slower.

Meantime, the BSP said that aided by remittances, the country’s balance of payments (BOP) for 2012 would likely post a surplus to the tune of $2.8 billion again.

BOP is the difference between the inflows and outflows of foreign currencies, led by the US dollar. A surplus indicates that the inflows, composed largely of remittances and export earnings, are more than the outflows that are led by payments for imported goods and foreign debts.

A surplus in the BOP increases the country’s overall reserves of foreign exchange, or the gross international reserves (GIR), which currently stand at about $75.8 billion, as of the end of October.

GIR indicates the country’s ability to service its foreign currency-denominated liabilities, such as payment for imported goods and services, and payment of foreign debts.

The projected BOP surplus for 2012, however, is less than the estimated $10 billion for this year. The decline is anchored on expectations that export earnings may drop further as the economic woes in the United States and the eurozone persist, although they are seen to somewhat abate.