OFW inflows surge 25% to $1.09B in Feb

Growth in remittances from Filipinos working overseas accelerated in February as expanding networks by domestic banks made it easier for relatives back home to access funds, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Remittances from overseas Filipino workers (OFWs) surged by 25.4 percent to $1.09 billion in February, bringing the two-month total 22.6 percent higher at $2.2 billion.

In the first two months of 2006, remittances amounted to $1.8 billion.

BSP Governor Amando M. Tetangco Jr. said the robust growth of remittances was due mainly to the expansion of bank networks that serve OFWs and their beneficiaries.

According to Tetangco, banks have systematically lured OFW remittances away from informal channels. Because of this, remittances coursed through banks are expected to grow by 10 percent this year and reach $14 billion. However, Tetangco said there was also a sustained demand for higher-skilled, thus better-paid, Filipino workers by host countries.  Consequently, Tetangco said remittances remained strong even as the number of deployed Filipino workers recorded a decline in the first two months of 2007 from the year-ago level.

Preliminary data from the Philippine Overseas Employment Administration (POEA) showed that total deployment declined by 12.1 percent year-on-year to 170,072.

Classified by type of worker, the number of land-based and sea-based workers went down by 10.1 percent and 18.8 percent to 134,644 and 35,428, respectively.

The BSP reported that the US, Canada, the United Kingdom, Italy, Saudi Arabia, United Arab Emirates, Japan, Hong Kong, and Singapore remained to be the major sources of remittances.

The BSP said that 47.1 percent of remittances came from the US although this was largely due to the common practice of using correspondent banks located mostly in the US. The BSP said the majority of OFWs were still deployed in the Middle East and Asian countries. Rising remittances may fuel spending on homes, cars and mobile phones, helping the government achieve its 2007 growth target of between 6.1 percent and 6.7 percent.

Growth in consumer spending in the Philippines accelerated to the fastest pace in three quarters in the three months ending Dec. 31, increasing 1.6 percent from the previous quarter.

Growth in remittances may slow this year amid a global economic slowdown.

The BSP expects remittances passing through banks will increase 10 percent this year to $14 billion after surging 19.4 percent last year.

Gains in the peso also reduce the value of foreign earnings when converted to the local currency, trimming cash available for spending.

The world economy is expected to expand 4.9 percent this year, decelerating from a 5.4 percent pace in 2006, the International Monetary Fund said in a report last week. The Washington-based lender cut its forecast for US growth in 2007 to 2.2 percent from a September estimate of 2.9 percent.

The Philippine peso has gained seven percent in the past year, the fourth biggest increase of 15 Asia-Pacific currencies tracked by Bloomberg.