Filipinos’ remittances to keep positive trend

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OFW-passportRemittances from Overseas Filipino Workers (OWF) remained strong during the first quarter of 2013, totaling $5.1 billion in the period despite a small dip in March.

The migrant community has always been a critical player in the Philippines’ economic development, with remittances being an important source of foreign currency and contributor to the domestic economy, accounting for some 10 per cent of GDP.

During the past three years, remittances have constantly grown at a 4 per cent rate in average, pushed by increasing demand for Filipino manpower especially in North America, Saudi Arabia, UAE, Qatar, Hong Kong and Kuwait. The highest demand comes form the service sector, followed by professional and technical sectors.

The remittances stream in the first quarter of 2013 came from the US (42.6 per cent), Canada (8.2 per cent), Saudi Arabia (7.9 per cent), UK (5.7 per cent), UAE (4.5 per cent), Singapore (4.2 per cent) and Japan (3.7 per cent), official data shows.

According to the Philippines Central Bank, the main vehicle to transfer money from abroad have been banks and money services that through their channels have absorbed 72 per cent of total remittances, showing Filipinos’ increasing trust on this tool instead of sending money back home through friends or relatives. In this context, I-Remit, LBC, Western Union, Xoom and Philippines National Bank have been the most important channels, and remittances transferred through banks have registered an increasing participation over the last years.

With foreign inflows from OFWs growing, local governments in the Philippines are working on different kinds of partnerships in order to increase the impact of the remittances on the domestic economy.  Examples of local governments’ commitments are Ilocos Norte and Taguig City, where authorities are trying to funnel family savings coming from remittances into different kinds of local investment initiatives in order to fund livelihoods, development projects and small business creation. Other initiatives are to reintegrate OFWs into the local economy after they return.

Remittances are also a strong component of the Philippines’ fiscal profile thanks to “persistent current account surpluses in which large net transfers from Filipinos working abroad more than offset on-going trade deficits,” as Agost Benard, credit analyst with Standard & Poor’s, said. The positive growth in remittance inflows to Philippines was one of the reasons that drove the agency to raise the country’s sovereign credit rating to investment grade recently.

The Philippines Central Bank for 2013 forecasts a 5 per cent annual increase in remittances volume.

 

 

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Reading Time: 2 minutes

Remittances from Overseas Filipino Workers (OWF) remained strong during the first quarter of 2013, totaling $5.1 billion in the period despite a small dip in March.

Reading Time: 2 minutes

OFW-passportRemittances from Overseas Filipino Workers (OWF) remained strong during the first quarter of 2013, totaling $5.1 billion in the period despite a small dip in March.

The migrant community has always been a critical player in the Philippines’ economic development, with remittances being an important source of foreign currency and contributor to the domestic economy, accounting for some 10 per cent of GDP.

During the past three years, remittances have constantly grown at a 4 per cent rate in average, pushed by increasing demand for Filipino manpower especially in North America, Saudi Arabia, UAE, Qatar, Hong Kong and Kuwait. The highest demand comes form the service sector, followed by professional and technical sectors.

The remittances stream in the first quarter of 2013 came from the US (42.6 per cent), Canada (8.2 per cent), Saudi Arabia (7.9 per cent), UK (5.7 per cent), UAE (4.5 per cent), Singapore (4.2 per cent) and Japan (3.7 per cent), official data shows.

According to the Philippines Central Bank, the main vehicle to transfer money from abroad have been banks and money services that through their channels have absorbed 72 per cent of total remittances, showing Filipinos’ increasing trust on this tool instead of sending money back home through friends or relatives. In this context, I-Remit, LBC, Western Union, Xoom and Philippines National Bank have been the most important channels, and remittances transferred through banks have registered an increasing participation over the last years.

With foreign inflows from OFWs growing, local governments in the Philippines are working on different kinds of partnerships in order to increase the impact of the remittances on the domestic economy.  Examples of local governments’ commitments are Ilocos Norte and Taguig City, where authorities are trying to funnel family savings coming from remittances into different kinds of local investment initiatives in order to fund livelihoods, development projects and small business creation. Other initiatives are to reintegrate OFWs into the local economy after they return.

Remittances are also a strong component of the Philippines’ fiscal profile thanks to “persistent current account surpluses in which large net transfers from Filipinos working abroad more than offset on-going trade deficits,” as Agost Benard, credit analyst with Standard & Poor’s, said. The positive growth in remittance inflows to Philippines was one of the reasons that drove the agency to raise the country’s sovereign credit rating to investment grade recently.

The Philippines Central Bank for 2013 forecasts a 5 per cent annual increase in remittances volume.

 

 

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