Money sent home by more than 10 million Filipinos working overseas continued to rise in September, insulating the economy from global volatilities and fueling domestic spending.
Bangko Sentral ng Pilipinas said cash remittances grew 6.7 percent year-on-year to $2.383 billion in September, the highest since it reached $2.47 billion in December 2015.
This brought cash remittances in the first nine months to $20 billion, up 4.8 percent from $19 billion a year ago. Remittances account for about a tenth of the gross national income.
Top countries that contributed to the growth in cash remittances were the United States, the United Arab Emirates, Japan, Qatar, Taiwan and Kuwait.
“Remittances from land-based workers increased by 11.9 percent during the month, compensating for the 10.5-percent decline in sea-based workers’ remittances,” Bangko Sentral said.
It said the declining remittances from sea-based workers might be due to stiffer competition in the supply of seafarers.
Personal remittances, which include non-cash items, also rose 6.3 percent in September to $2.626 billion from $2.469 billion a year ago.
Remittances and BPO revenues provide steady inflows which boost private consumption.
Meanwhile, Finance Secretary Carlos Dominguez III said the economy could withstand the adverse effects of protectionist policy of newly-elected US President Donald Trump, as the Philippines was beginning not to rely too much on western economies.
Trump said during the campaign period US immigration policies might be tightened and outsourcing activities reduced in a bid to bring back jobs to the US.
“Our economy does not rely on exports too much. That is why even during the crisis in 2008, we were not so much affected,” Dominguez said at the sidelines of a Senate budget hearing.
“We have declared that we are reorienting our economy towards Asia, and we are going to have less reliance on the West. I think that was very prescient of the president who gave that direction,” he said.
Dominguez, however, said he did not want to speculate about the future of the business process outsourcing companies operating in the Philippines, mostly Americans.
Dominguez said the BPO sector began to flourish in the Philippines at the time of US President George W. Bush, a Republican president.
“That is a Republican move, that was when the BPO sector flourished. But we have to see what makes sense. Is it more efficient for Americans to do it here or not?” he said.
Dominguez said the cost differential in doing BPO jobs in the US and the Philippines remained substantial. He said the depreciation of the peso versus the US dollar would even “make us more competitive.”
Dominguez said it would be best to wait and see if the next US president would stick to what he said during the campaign period.
“The question is, is he going to stick to the normal or the usual Republican tact? It seems not. Trump is for cutting taxes which is the usual Republican tact, but he wants to spend on infrastructure which is not the usual Republican tact. So we really can’t say until we see what his team is going to put in his program,” Dominguez said.
Japanese financial firm Nomura earlier reduced its growth forecast for the Philippines next year to 6.1 percent from the previous estimate of 6.3 percent because of the potential adverse impact on the domestic economy of Trump’s policies.(J. G. Rada, MS)