3%-5% remittances growth seen this year

Overseas Filipinos’ remittances is expected to report healthy growth in 2017 albeit moderate, about three percent to five percent year-on-year increase, according to Standard Chartered Bank in Manila.

“We have remained positive on remittances growth – despite the decrease in July and October (2016), we retained our forecast of remittance growth to remain positive in the medium term, and remain steady, not spectacular,” said the bank’s economist Chidu Narayanan. “We continue to retain our view that while 2017 will likely see a smaller overseas remittances growth, remittances will still continue to grow at average of three-five percent in the Philippines.”

In a commentary, Narayanan said they are also maintaining a positive view on the country’s current account balance. “(The) biggest driver for the drop in current account in late 2016 was an increase in capital goods imports – which is not really a cause for concern (right now).”

He added, “we expect forthcoming remittance growth to be mildly slower than before as the number of outgoing workers stabilizes on better opportunities in the Philippines. Workers returning to the Philippines are likely to find work in the services sector, supporting higher service exports.” He also expects services exports to “take over from remittances as the key driver of the current account surplus.”

Narayanan said they expect the currenct account will remain in surplus this year and they forecast “smaller surpluses” of 1.3 percent of GDP in 2016, 1.1 percent in 2017 and one percent in 2018.

The central bank reported on Wednesday that in 2016, cash remittances grew five percent year-on-year to $26.9 billion. Personal remittances also went up by 4.9 percent year-on-year to $29.7 billion.

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo, currently governor-in-charge, said in a statement that the growth in personal remittances was boosted by the 7.6 percent expansion in fund transfers worth $23.2 billion sent by land-based workers with work contracts of one year or more.

The $23.2 billion offset the 3.7 percent drop in remittances that came from sea-based and land-based workers with work contracts of less than one year. This reached about $6.1 billion, according to Guinigundo.