OFW remittances up 5.4% to $1.56 B in Jan

MANILA, Philippines - Remittances from Filipinos abroad grew at a slower pace of 5.4 percent in January on the back of economic growth concerns in advanced economies led by the US as well as the sovereign debt crisis in Europe, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

BSP Governor Amando Tetangco Jr. said that total remittances from overseas Filipinos amounted to $1.557 billion in January or $81 million higher than the $1.476 billion booked in January last year.

“Sustained demand for professional and skilled Filipino workers underpinned the steady flow of remittances,” Tetangco stressed.

However, this is the slowest year-on-year growth since November 2009 when overseas Filipino workers’ (OFW) remittances went up by 5.1 percent.

The BSP sees the growth of OFW remittances slowing down to five percent this year. Higher remittances result in stronger external payments position, boosting the country’s buffer fund to fend off the impact of global shocks.

OFW remittances went up by 7.2 percent to a new record high of $20.117 billion last year from $18.763 billion in 2010, exceeding the revised growth target of seven percent.

Tetangco said remittances from sea-based Filipino workers jumped 19.8 percent to $369 million while that of land-based workers inched up by 1.6 percent to $1.2 billion in January.

Data showed that about 60.2 percent of land-based workers’ remittances in January came from the US with 24.4 percent, Canada with 13.1 percent, Saudi Arabia with 8.4 percent, the United Arab Emirates with 3.9 percent, Italy with 3.5 percent, Japan with 3.5 percent, and the United Kingdom with 3.4 percent.

On the other hand, remittances from sea-based workers originated mostly from the US with 14.6 percent.

Recent data from the Philippine Overseas Employment Administration (POEA) showed that total processed job orders stood at 22,688 for the first two months of 2012. Job orders were intended for manpower requirements in Saudi Arabia, UAE, Qatar, Taiwan, and Kuwait.

“For 2012, enhancements in the recruitment systems of host countries, as reported by the POEA, are expected to support the resilience of remittance flows,” he said.

Aside from the diversified destinations and skills of overseas Filipinos, the BSP also cited the strategic network of bank and non-bank service providers across the globe as well as the new financial products and money transfer services offered in the remittance market.

Tetangco pointed out that banks and other financial institutions have been aggressively expanding their global financial services through tie-ups with foreign financial institutions and local telecommunication companies.

“This depicts the continuing efforts of local banks and other financial institutions to cater to the diverse money transfer needs of overseas Filipinos and their beneficiaries,” he added.

HongKong and Shanghai Banking Corp. (HSBC) economist Trinh Nguyen said OFW remittances sent less money home in January due to challenging conditions in host countries.

“While remittance growth has decelerated recently, it is still robust, which would continue to be a major driver of private consumption in the Philippines. We expect remittances to stay strong in 2012, albeit expanding at a slower pace of five percent,” Nguyen added.

She pointed out that challenging conditions in host countries have weighed upon remittance growth recently, suggesting that private consumption would likely be less robust this year.

“Remittances decelerated for two straight months, giving less support to domestic spending in the Philippines. The government has implemented both monetary and fiscal expansion to boost domestic demand and mitigate the effect of remittance slowdown,” Nguyen said.

Aside from boosting the country’s external payments position to serve as buffer to external shocks, OFW remittances that accounted for about nine percent of gross domestic product (GDP) continued to be a major contributor in economic growth through higher consumption.