MANILA, Philippines - Dutch-owned financial giant ING BV said it expects the growth in the amount of money sent home by Filipinos abroad to their loved ones in the Philippines to ease to five percent this year before improving to six percent next year, but would continue to cover the country’s trade deficit.
ING senior economist Joey Cuyegkeng said in a presentation that the growth in remittances from overseas Filipino workers (OFW) this year and next would be slower than the projected growth of eight percent for 2010.
The projected growth of the investment bank is more conservative than the eight percent growth for OFW remittances set by the Bangko Sentral ng Pilipinas (BSP) for this year.
Latest data from the central bank showed that OFW remittances went up by 8.2 percent to $17.068 billion in the first 11 months of last year from $15.78 billion in the same period in 2009 on the back of the strong demand for skilled Filipino workers abroad. For the month of November alone, remittances posted a double-digit growth of 10.5 percent to $1.612 billion from $1.459 billion posted in the same month in 2009.
The robust demand for Filipino manpower in various global destinations owing to their diversified skills was behind the continued flows of remittances particularly from the US, Canada, Saudi Arabia, Japan, United Kingdom, United Arab Emirates, Singapore, Italy, Germany and Norway.
Remittance flows would be supported by the implementation of hiring agreements between the Philippine government and host countries including Canada, Japan and Saudi Arabia, as well as the recruitment plans in Guam, Malta and Qatar.
Data from the Philippine Overseas Employment Administration (POEA) showed that approved job orders increased 15 percent to 624,045 while land-based workers classified as new hires with processed contracts awaiting deployment went up 16.6 percent to 423,271 last year.
The BSP also cited the continuing efforts to improve on the variety and coverage of the global remittance networks enabling more overseas Filipinos to send remittances using more innovative financial services offered in the market.
Cuyegkeng pointed out that the strong inflows would continue to cover the country’s trade deficit that is expected to ease further to $11.7 billion this year and $11 billion next year from about $12.2 billion last year.
ING sees the country’s merchandise export growth slowing down to 18 percent this year and 12 percent next year from about 21 percent last year while the expansion of imports would likewise ease to 13 percent this year and nine percent next year from 25 percent last year.
OFW remittances together with earnings receipts from the business process outsourcing (BPO) sector has fueled a major growth in the country’s external payments position prompting rating agencies led by Moody’s Investors Service as well as Standard and Poors to upgrade the credit rating and credit rating outlook of the Philippines.
The country’s balance of payments (BOP) position — which refers to the difference of foreign exchange inflows and outflows on a particular period and represents the country’s transactions with the rest of the world — posted a record surplus of $13.2 billion as of end-November last year.