BSP: Fewer households allot remittances for savings
The proportion of Filipino households that set aside remittances for savings and investments dropped in the fourth quarter from a year ago, highlighting the need to provide financial education to more people in the country.
The Bangko Sentral ng Pilipinas said that households dependent on remittances would need to learn how to save and invest the money they receive to secure their future and stimulate growth of the economy.
Results of the latest quarterly BSP survey showed that only 39.5 percent of respondents said they used a portion of their money for savings. This marked a drop from the 42.6 percent recorded in the same period last year.
Still, the fourth-quarter figure was better than the 36.8 percent recorded in the previous survey three months ago.
Results also showed that respondents who said they used a portion of their money for investments settled at just 3.1 percent. This represented a decline from the 6.4 percent registered a year ago, and the 4.9 percent of the previous quarter.
The survey was conducted in the first two weeks of October and had a sample of size of 478 households that regularly receive money from abroad.
The drop in the number of households that save up and invest the money received coincided with the current low-interest-rate environment, which led to shrinking yields on bank deposits and portfolio investments.
Economists said that in times of low interest rates, people tend to spend more of their money rather than save up or invest in fixed-income securities.
BSP Deputy Governor Diwa Guinigundo earlier said that if OFW households were to use their money to put up their own businesses, the multiplier effect of remittances on the economy would be much bigger. This is because, when one puts up a business, even a small one, he or she will create jobs.
At least 10 million Filipinos are estimated to be working overseas. Their remittances amounted to $20.1 billion last year. The World Bank expects remittances to the Philippines to rise to $24 billion this year, making it the third-biggest recipient next to India and China, with $70 billion and $66 billion, respectively.