ADB: Manufacturing benefits the most from remittances

The manufacturing sector is the biggest recipient of spending made by households receiving remittances from overseas Filipino workers, according to the Asian Development Bank (ADB).

In a study, the multilateral lender said remittances play an important role in advancing economic development.

“Remittances largely go to migrants’ families, supporting their consumption and sometimes their investment activities,” the ADB said.

The amount of money sent home by Filipinos working and living abroad has substantial contribution to the Philippine economy at nine percent.

Analyzing data of household spending of remittance recipients in the country in 2018, the ADB study found that bulk went to manufacturing at P162 billion, accounting for a 35 percent share.

Wholesale and retail trade came in next with P61.2 billion or 13.2 percent share, followed by agriculture with P59.2 billion or 12.8 percent of the total.

“Given the huge allocation in the manufacturing sector, the effect of remittance income is largest in the sector in both gross output (P455 billion or 35.5 percent of gross output contribution) and value added (P143 billion or 23 percent of gross value added),” the ADB said.

It said agriculture, as well as wholesale and retail trade also generate a large share of remittance-led outputs, accounting for P178 billion and P150 billion, respectively.

In terms of investments or the savings portion of remittance flows, construction had the biggest share at P118 billion or 72.7 percent.

This was followed by manufacturing with P24.7 billion or 15.2 percent share, and agriculture with P15.9 billion or 9.8 percent.

“The savings and investment portion of their remittance income also boosts economic output, largely due to their expenditure on real property and construction activities,” the ADB said.

When it comes to the employment impact, the multilateral lender said remittance-induced demand benefits 644,000 individuals employed in the agriculture sector or 43 percent of total employment.

There is also a high employment impact in the wholesale and retail trade sector (209,000) and in construction (154,000).