Remittances coursed through banks seen to grow by 5% in ’12

Remittances from overseas Filipinos coursed through banks are expected to grow by about 5 percent this year given a gloomy outlook particularly for major economies in the West, according to DBS Group.

The financial services provider’s projection was adjusted to that of the Bangko Sentral ng Pilipinas, which pointed to remittance growth easing to a three-year low from 7.2 percent in 2011 and 8.2 percent in 2010.

Earlier this year, DBS said remittances “may perform even better [than in 2011] on the back of higher economic growth in the United States this year.”

The Singapore-based group now observes that cumulative growth in the four months to April was only 5.4 percent year on year.

“Remittances (from) Europe were down by 5.9 percent, but resilient numbers from Asia (11.8 percent) and the United States (11.1 percent) helped to prop up the overall figure,” DBS said.

“In seasonally adjusted terms, the absolute value has actually been declining since November,” it added.

BSP data showed that cash remittances reached $1.78 billion last November and $1.7 billion in April.

“With signs of weakness in the US economy, the persistence of the eurozone debt crisis and the threat of a hard landing in China looming, the prospect of a synchronized economic slowdown is real and this will have an impact on remittances,” DBS said.

“However, given its display of resilience in the past, we still expect remittance growth of around 5 percent this year,” it added. “Accordingly, there will not be as much of a boost to private consumption on this front.”

For monetary authorities, their forecast reflects confidence in the continued growth in remittances flow given the strong demand for Filipino workers in alternative labor markets.

On June 15, the BSP said the January-April fund transfers rose on the back of higher remittances from both sea-based and land-based workers.

The BSP has started computing remittance inflows in line with the International Monetary Fund’s Balance of Payments and International Investment Position Manual (6th edition).

The manual provides guidance in the recording of cross-border transactions and positions according to a set of internationally agreed guidelines.

BSP Governor Amando M. Tetangco Jr. said the refined computation measures “personal” remittances, as opposed to the usual “cash remittances.”

Personal remittances measure the flow into the country of cash and noncash items through both formal and informal channels, including money and goods carried across borders.

Personal remittances from overseas individual Filipinos reached $1.9 billion in April, up 5.5 percent year on year. This brought the four-month inflows to $7.3 billion, up by 5.6 percent.