Growth in remittances may decelerate further over the medium term, but the country is expected to still enjoy substantial increases in foreign exchange inflows on the back of a projected tourism boom, exports recovery and further expansion of the business process outsourcing sector.
This was according to the Bangko Sentral ng Pilipinas, which said that the slowdown in remittances seen recently was likely to continue in the next few years. However, it added that this should not harm the country’s ability to generate foreign exchange inflows.
The BSP said revenues from tourism and exports, and foreign direct investments in the BPO sector should support growth in foreign exchange inflows.
“The government is pushing for further development of sectors that will help the country depend less on remittances (as far as its foreign-exchange needs is concerned],” BSP Governor Amando Tetangco Jr. told reporters.
Remittances, which have been a significant source of foreign exchange inflows for the Philippines with about 10 million Filipinos estimated to be working overseas, are seen to post slower growth in the years to come, as offshore jobs available for migrant workers move closer to saturation.
Data from the BSP showed that money sent home by overseas Filipinos grew by a yearly rate of 7.2 percent to $20.1 billion last year. Economists considered the amount significant, although the growth rate was lower than the 8.2 percent registered in 2010.
This year, the central bank expects remittances to still grow, albeit by an even slower rate of 5 percent.
Despite the likely slowdown of remittances this year and the next few years, Tetangco said the country’s reserves of foreign exchange would still grow significantly.
He said the government’s tourism campaign was seen to increase tourist arrivals and tourism revenues for the country.
In the meantime, the recovery of advanced economies from the latest global crisis and the Philippines’ efforts to diversify its export markets are seen to increase the country’s export earnings and reverse the contraction posted last year.
“Moreover, BPO investments are seen to continue growing,” Tetangco said. He expressed confidence that the Philippines would remain a top choice for BPO investments.