Goldman Sachs sees 6% rise in OFW remittances

MANILA, Philippines - US-based investment bank Goldman Sachs sees remittances from overseas Filipino workers (OFWs) increasing by six percent this year.

Goldman Sachs said in its Asia Economics Data Flash that the investment bank’s projected growth in OFW remittances this year is bullish than the revised growth outlook of the Bangko Sentral ng Pilipinas (BSP).

Instead of a zero growth, the BSP now expects OFW remittances to grow by at least four percent to a record $17.1 billion this year from $16.4 billion last year.

“We expect remittances to be even stronger, growing six percent year-on-year in 2009 versus the central bank’s improved expectation of four percent year-on-year growth and the consensus expectation of 5.5 percent growth,” the investment bank said.

Latest data from the central bank showed that OFW remittances inched up by 3.7 percent to $11.34 billion from January to August compared with $10.94 billion in the same period last year.

Major sources of remittances in the first eight months of the year include the US, Canada, Saudi Arabia, United Kingdom, Japan, Singapore, United Arab Emirates, Italy, and Germany.

The investment bank said the peso would continue to strengthen against the dollar over the next three to 12 months due to robust OFW remittances.

“We expect remittances to become relatively more supportive of the peso over the next 12 months,” it said.

OFW remittances, monetary authorities said, continued to underpin the resilience of the economy and have remained a stable source of foreign exchange for the country.

Goldman Sachs said robust remittances would continue to boost private consumption and boost the country’s gross domestic product (GDP) growth especially with the damages caused by tropical storm Ondoy and typhoon Pepeng.

“At over 10 percent of GDP, growing remittances are likely to give a push to private consumption and GDP growth, offsetting some of the impact from the typhoon-related slowdown in agricultural production,” the investment bank added.