Phl becoming less dependent on remittances, says NEDA

MANILA, Philippines – The Philippine economy has become less dependent on remittances from overseas Filipinos over the past three years, an official of the National Economic and Development Authority (NEDA) said.

NEDA National Planning and Policy Staff head Rosemarie Edillon noted that growth in the country’s net primary income – or the difference between money received abroad and money paid abroad – has been declining as reflected in the country’s gross national income (GNI).

Gross domestic product (GDP) grew 7.6 percent in 2010 while net primary income grew 10 percent.

However, the pattern started to reverse in 2011, with net primary income growing only one percent compared to GDP growth of 3.9 percent.

 GDP measures the value of goods and services within the country, while  GNI incorporates net primary income from abroad that includes remittances.

“Whenever our growth in net primary income is higher than GDP, it means that we are heavily relying on remittances. But in the past few years, the Philippines’ GDP growth has been higher than its net primary income from abroad,” Edillon noted.

For the first quarter this year, GDP grew 6.3 percent, while net primary income only grew 1.7 percent. While net primary income rebounded to 4.5 percent in the second quarter, it was still lower than the 5.9-percent GDP growth for the period, data from the National Statistical Coordination Board (NSCB) showed.

“In the economic profile, we are seeing the case where our GNI growth is actually less than our GDP growth, which is a good thing,” Edillon added.

The NEDA official, who was one of the reactors in a series of roundtable discussions on the “Political Economy of Philippine Labor Migration” at the Ateneo de Manila University, said migration is a global issue of demand and supply among countries with different levels of development.

The Philippine economy is still considered as developing but at a high stage of human capital development. Likewise, there are developed countries that require a certain level of human capital, which the Philippines had been able to supply.

“The global demand would always be there. Zero dependence on remittances is probably very ambitious. In reality, overseas remittances are a significant part of a country’s economy, whether developed, developing or at any stage of economic development,” the NEDA official said.

Remittances from overseas Filipinos account for about 10 percent of GDP.

Last year, remittances sent by overseas Filipinos amounted to $20.1 billion, the highest ever, although its growth rate has fallen to just five percent from double-digit growth rates in previous years.