MANILA, Philippines - Barcelona-based think tank FocusEconomics said private consumption would continue to be the main driver of economic expansion in the Philippines over the next two years.
Massimo Bassetti, economist at FocusEconomics, said private consumption would expand six percent this year and 5.9 percent in 2018.
Bassetti said remittances, which accounted for approximately 9.8 percent of gross domestic product (GDP) in 2015, are an important source of income for many Filipino families and thus one of the main drivers of private consumption.
Bassetti said cash remittances from overseas Filipino workers surged 18.5 percent to $2.2 billion in November, the highest growth in over eight years.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed remittances rose 5.2 percent to $24.34 billion in the first 11 months of 2016 from $23.14 billion in the same period in 2015.
The central bank said the improving global economic conditions, particularly in the US, may have contributed to the overall growth in remittances.
By country source, the bulk of cash remittances came from the US, Saudi Arabia, United Arab Emirates, Singapore, the United Kingdom, Japan, Qatar, Kuwait, Hong Kong, and Germany.
Combined remittances from these countries accounted for more than 80 percent of the total cash remittances in the first 11 months of 2016.
The economy grew 6.6 percent in the fourth quarter of last year.
“The robust growth in the final quarter reflects the strong fundamentals that underpin the current growth phase and bodes well for the Philippines’ outlook,” he said.
The think tank said growth in the Philippines continues to be underpinned by robust domestic demand, which is largely offsetting the external sector’s negative contribution to growth.
It pointed out the ongoing expansion in public spending has been reflected in both an acceleration in public construction activity and a pick-up in government consumption.
Rising consumer confidence, falling unemployment and growing overseas remittances translated into solid, if moderating, consumer spending.
The economy expanded 6.8 percent in 2016 from 5.9 percent in 2015, well within the six to seven percent target penned by economic managers.