MANILA – Growth of remittances going to the Philippines remains within the central bank’s five percent target but it has slightly slowed compared in the previous years.
Bangko Sentral ng Pilipinas (BSP) data shows that cash remittances has been growing at about five percent level since November 2014.
In June 2015 alone, cash remittances grew by 5.6 percent, a drop from the six percent expansion same period in 2014.
Inflows amounted to US$ 2.18 billion in the sixth month this year, higher than month-ago’s US$ 2 billion and year-ago’s US$ 2.1 billion.
Cash remittances posted its fastest expansion in January 2013 when it rose by 9.1 percent to US$ 1.7 billion.
Remittances has been among the major drivers of the domestic economy for years now as it contributes about 10 percent in gross domestic product (GDP).
It has also proven its resiliency during the recent global financial turmoil.
And while its growth has slowed a bit, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo remains confident that it will continue to be a major boost for the domestic economy.
He explained that the seeming slowdown of inflows from overseas Filipinos is not negative because it only reflects that remittance business in the country is reaching maturity.
“The growth of five to six percent is something that is already appropriate in this point,” he said in a briefing Friday.
Guinigundo also cited the softness in global expansion as another factor in the slight slowdown in remittance inflows.
He, on the other hand, pointed out that the inflows are now more recession-proof because of the diversified profiles of overseas Filipino workers (OFWs).
Previously, most of the Filipino workers abroad are household helpers or construction workers.
Now, more OFWs are skilled and work in the field of medicine and information technology among others.
And with higher remittance coming from skilled workers the central bank official is optimistic that the inflows would continue to firmly support the country’s balance of payment (BOP) position.
“I think a five to six percent growth assumption is appropriate at this point. The US$ 24, US$ 25 or US$ 26 billion inflows from remittances will continue to support the BOP,” he added.
As of last August, the country’s BOP, which is the sum of the economy’s total transaction with the rest of the world, yielded a surplus of US$ 1.6 billion, a reversal from the US$ 3.5 billion same period last year.
The central bank’s BOP target for 2015 is a surplus of US$ 2 billion.