MANILA, Philippines - British banking giant HongKong and Shanghai Banking Corp. Ltd. (HSBC) sees a slower five percent growth in remittances from overseas Filipino workers (OFWs) due to external developments.
In a report, HSBC economist Trinh Nguyen said the growth of remittances from OFWs would slow down to about five percent this year from 6.9 percent last year.
“History shows that the country’s output is not completely immune to global headwinds, so remittances growth will likely decelerate in 2012,” Nguyen stressed.
Despite the expected slowdown, the economist said the amount of money sent home by about 8.5 million Filipinos overseas would continue to support private consumption.
“At home, steady remittance flows should support consumption, if at a slower pace than before,” she explained.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed that OFW remittances posted a double-digit growth of 10.6 percent to hit a new monthly record of $1.783 billion in November last year from $1.612 billion a year ago.
For the first 11 months of last year, the BSP said remittances went up by 7.3 percent to $18.317 billion from $17.068 billion in the same period in 2010. Major sources of remittances include the US, Canada, Saudi Arabia, United Kingdom, Japan, United Arab Emirates, Singapore, Italy, Germany, and Norway.
“Despite increasingly challenging economic conditions in host countries, remittances have been robust in 2011 due to the resilient nature of Filipino workers’ employment and improve remittance network of banks,” Nguyen said.
This year, monetary authorities expect a slower growth of five percent or $21.2 billion.
Nguyen pointed out that it would be best for the Philippines to seek domestic sources of growth as countries in the Eurozone areas continue to stumble towards recession as well as the slowing growth prospects in the US, Japan, and even China.
HSBC now expects the country’s domestic output as measured by the gross domestic product (GDP) expanding by 3.6 percent this year and next year.
“Our 2012 GDP growth forecast of 3.6 percent reflects low external demand for Philippine electronics, as well as the country’s growing loss of competitiveness,” she said.
The Cabinet-level Development Budget Coordination Committee (DBCC) sees the country’s GDP expanding between five percent and six percent this year from the revised growth range of 4.5 percent to 6.5 percent last year.
The GDP growth slackened to 3.2 percent in the third quarter of last year from 7.3 percent in the same quarter in 2010 bringing the average growth to 3.6 percent in the first nine months of last year.