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Filipinos’ remittances from the UAE act as the lifeline of economy

The UAE is one of the top sources of foreign remittances to Philippines. The amount of funds transferred from Filipino expatriates now touches the strategic mark of $2 billion annually. This is one of the biggest and most consolidated remittances to the Southeast Asian country from the Middle East. Statistics say that the volume of transfer has grown by around 8 per cent over the last couple of years. Economic cooperation and investment profile between the two countries is on the rise, and this has further cemented their relationship.

It is estimated that more than 700,000 Filipinos live and work in the UAE, and is the third largest expat community in the Arab country after Indian and Pakistani nationals. The Philippines’ Central Bank acknowledges that the UAE is one of the biggest contributors of money transfers, along with the United States, Saudi Arabia, Singapore, United Kingdom, Japan, Qatar, Hong Kong and Germany. Remittances from across the globe are equivalent to 12 per cent of the GDP; and according to the International Monetary Fund, this factor has made it the 13th largest economy in Asia. Philippines’ public debt, nonetheless, is around 37 per cent of its GDP, and government spending amounts to 19 per cent of total annual budget.

The UAE is the Philippines’ secondlargest trading partner in the Middle East, with bilateral trade growing at a pace of 9 per cent annually. Philippines’ exports to the UAE account for $300 million, whereas imports touch $500 million. Tourism is another sector that has buoyed foreign remittances, as a large number of Emiratis now prefer to holiday in Philippines.

The third largest economy in the ASEAN region, Philippines’ growth outlook remains positive. It has successfully addressed the unemployment syndrome, as it stands today at 6.7 per cent, and this factor has helped alleviate the lot of the poor — and at the same time boost foreign exchange reserves.

Many of the macroeconomic indicators of the country are promising. It has remained resilient to global upheavals. A country of over 100 million people, agriculture constitutes a major component of its economy, whereas industrial production, electronics, apparel, shipbuilding and processed food and beverages are other prime revenue generation avenues. The country also has a decent industrial base, and a robust entrepreneurial sector.

A large number of Filipinos are overseas workers in the region and beyond, spread up to the Gulf and the European Union, which is a blessing in disguise. Moreover, the country’s consumption and production pattern is unique in essence and this has helped it overcome poverty in the shortest possible time. With Philippines gradually introducing long-term reforms and lifting moratorium on opening of new banks, its foreign exchange reserves are likely to touch the $100 billion mark.

Official sources in Manila say that the flow of remittances to the Philippines has seen a steady rise this year. The rise is recorded at 23 per cent compared to last year’s record, making it the third largest remittance volume worldwide this year, the World Bank confirmed. The country is expected to be the third largest recipient of cash transfers worldwide, standing to absorb $33 billion in remittances this year next to India ($65 billion) and China ($61 billion). This will naturally drive domestic demand, fueling the growth of the economy. As a set back, however, Philippines saw a downslide from Saudi Arabia, as remittances fell from $2.3 billion to a mere $1.5 billion. The Central Bank says, “The sustained increase in remittances was supported by stable demand for skilled Filipinos abroad.” Data from the Philippine Overseas Employment Administration also proved that 1.14 million more Filipino workers were hired abroad in 2017. Authorities have set a four per cent growth target for both personal and cash remittances this year.

Cash remittances from about 12 million Filipinos living and working abroad contribute about 10 per cent to the country’s output as measured by gross domestic product.