Jan. OFW remittances up 7.6% to $1.47 billion

(Updated 9:19 p.m.) Money transfers by overseas Filipino workers (OFWs) to relatives in the Philippines increased 7.6 percent in January amid the outbreak of tensions in Middle East and North African (MENA) states, the Bangko Sentral ng Pilipinas (BSP) said Tuesday. OFW remittances reached $1.476 billion in January, up $104 million from $1.372 billion in January 2010, BSP Gov. Amando Tetangco Jr. said in a statement. Money transfers by sea-based OFWs rose 13.3 percent, those of land-based Filipino workers abroad went up 6.2 percent in the same comparable period, the central bank said. "Remittance flows into the country remained resilient on the back of sustained demand for skilled overseas Filipino workers in different destinations worldwide," according to the central bank governor. The bulk of remittances or about 80 percent came from the US, Canada, Saudi Arabia, Japan, United Kingdom, Singapore, United Arab Emirates, and Italy. Tetangco said the financial services catering to OFWs, enhanced by tie-ups with foreign financial institutions, and the establishment of more remittance centers and marketing offices abroad helped boost the flow of remittances to the Philippines. The partnerships with correspondent banks and branches abroad also helped strengthen this side of the financial system, he added. "The expansion of the remittance network indicated the continuing efforts of local banks and other financial institutions to capture a larger market share of the global remittance industry and provide safe, affordable, and accessible fund transfer system for OFWs and their beneficiaries," the BSP chief said. OFW remittances grew 8.2 percent to a record $18.76 billion last year from $17.35 billion in 2009, exceeding the revised 8-percent from 6-percent forecast by the BSP for 2010. O This year, the BSP sees OFW remittances growing 8 percent and breaching $20 billion. Rethinking their projections However, monetary authorities are rethinking their projections in light of the continuing unrest in MENA states and the nuclear catastrophe now gnawing at Japan in the wake of Friday’s magnitude 9.0-temblor and the ensuing tsunami. The BSP, according to the central bank chief Monday, will review its remittance forecast and the country's external payments position because of those developments. "We will consider all the data or indicators that we have on both current and future trends as we scan the operating environment. More directly, even as there are pockets of vulnerabilities in some MENA states due to social unrest, higher oil prices boost the economies of oil producing countries in the Middle East," Tetangco said. "So there are offsets and counterpoints," he added. HSBC stays upbeat While the remittance outlook for the Philippines "may have been somewhat clouded by uncertainties in the Middle East, we see limited downside so long as the economic recovery in the West continues and momentum in Asia remains intact," said Sherman Chan, HSBC economist for the Association of Southeast Asian Nations, which include the Philippines. On a seasonally adjusted basis, remittances climbed 0.9 percent month-on-month in January, following a 2.5-percent month-on-month decline, according to the British-owned lender. This, however, does not mean a downtrend has emerged, Chan said. “There are signs of improvement in January when looking at the seasonally adjusted data on a sequential basis." The economist explained, "We do not expect a slowdown in remittances from the Middle East to weigh too heavily on overall growth. Indeed, with the Philippine peso likely to appreciate through the year, and overseas Filipino workers keen to maintain the level of remittances in local currency terms, we may even see a pickup in remittances in US dollar terms in the coming months." Despite the events in MENA countries and elsewhere, the remittance flows remained resilient and, with more banking and remittance units entering the marketplace for years to come, a stronger flow of OFW remittances likely is the trend, Tetangco noted. "In light of the recent chaos in the Middle East, concerns about the Philippine remittances outlook are understandable. However, with the region accounting for only roughly 15 percent of Philippine remittances in the past five years, economic developments in the West and in Asia still carry larger implications," Chan concluded. — VS, GMA News