ING economist says outsourcing revenues to still support structural inflows to PHL

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MANILA – An economist of ING Bank Manila remains positive on structural inflows to the Philippines amidst the slower growth of remittances.

Growth of remittances slowed in 2015 and monetary officials attributed this to foreign banks’ more stringent rules against money laundering.

As of end-November 2015, cash remittances has grown 3.6 percent year-on-year to USD 22.83 billion.

Total personal remittances, with include in-kind remittances, rose 3.4 percent year-on-year to USD 25.2 billion during the same period.

These were lower than the 5.9 percent growth of cash remittances and 6.3 percent for personal remittances in end-November 2014.

The central bank is scheduled to report the full-year 2015 remittance report on Feb. 19, 2016.

Some sectors said the sustained drop in oil prices may be a factor in the growth deceleration of remittances but ING Bank Manila senior economist Joey Cuyegkeng, in a research note, said
“ascertaining the overall impact of the oil price plunge on OFW (Overseas Filipino Workers) deployment and employment conditions is difficult.”

“Deployment so far has been favorable while some rely on resiliency of OFWs in the face of challenges which has been proven during the Arab Spring,” he said, citing his flat growth projection for remittances this 2016.

And while remittances is seen to post a flat growth this year, Cuyegkeng said outsourcing revenues, which is seen to rise by 15-16 percent this year “would still keep overall structural inflows growing.”

“Outsourcing revenues would still keep overall structural inflows growing,” he said.

Cuyegkeng also pointed out that “a flat growth of OFW remittances would still allow structural inflows to gain seven percent year-on-year to barely below USD 50 billion.”

“It would also still mean USD 25 billion of inflows which we believe would more than offset the trade gap and still keep the current account in surplus,” he added.