OFW remittances seen to grow 11% in Dec

MANILA, Philippines - US-based investment bank Goldman Sachs sees remittances from overseas Filipinos growing by a double-digit level in December on the back of improving global economic conditions and the Christmas season.

Goldman Sachs said the amount of money sent home by overseas Filipino workers (OFWs) would continue to grow over the next few months until it reaches a double-digit growth of 11 percent by December.

“We expect growth in overseas remittances to accelerate over the next few months and reaching 11 percent year-on-year by December, as a lagged response to improving global growth conditions, an uptick in oil prices improving macro environment in the Middle East, and the Christmas season inflows acting as catalyst,” the investment bank stated in its Asia Economics Data Flash.

If achieved, this would be the first time since November last year OFW remittances would grow by at least 10 percent. The amount of money sent home by OFWs expanded by 10.5 percent month-on-month in November of 2008.

Goldman Sachs believes OFW remittances would grow by six percent this year.

Instead of a zero growth, the Bangko Sentral ng Pilipinas (BSP) now expects OFW remittances growing by at least four percent to a record $17.1 billion this year from $16.4 billion last year.

Latest data from the central bank showed that OFW remittances expanded by 4.2 percent to $12.789 billion from January to September compared with $12.273 billion in the same period last year.

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

Goldman Sachs said robust remittances would continue to boost private consumption and revive the country’s slackening 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.

Economic managers through the Development Budget Coordination Committee (DBCC) expect the GDP to expand between 0.8 percent and 1.8 percent this year from 3.8 percent last year.

The country’s GDP growth eased to 1.0 percent in the first half of the year from 4.0 percent in the same period last year due to the full impact of the global economic meltdown.