OFW money transfers leveling off, banker says

Foreign inflows, particularly remittances from millions of overseas Filipino workers, have afforded the Philippines a kind shelter from the falling financial fortunes of the wealthiest and most disciplined economies such as Japan, China and the United States, Bank of the Philippine Islands said on Thursday. While such inflows provide temporary relief, their beneficial economic impact would eventually fade at some point, said BPI president Aurelio R. Montinola III. He told financial reporters at the sidelines of BPI’s annual stockholders’ meeting that OFW inflows have already started to plateau. He said it was providential that remittance flows from troubled Libya, Tunisia and Egypt were next to nothing, adding that very little remittance flows come from Japan as well. Montinola was saying the Philippines has to rely more on homegrown funds over foreign capital going forward to finance the country’s growth requirements. OFW inflows have helped push the economy forward as the remittances account for some 10 percent of last year’s output as measured by the gross domestic product, he said. The National Economic and Development Authority said last week that the country’s nominal GDP value was P8.5 trillion last year. Philippine officials are saying, however, that last year’s $18.76 billion in OFW remittances — up 8.9 percent from 2009 figures — may stay the same this year in terms of growth. Bangko Sentral Gov. Amando M. Tetangco earlier said that remittances will still grow but no more than 8 percent.. “At some point, there will be a plateauing in the remittance flows," Montinola said. The greater risk the country faces this year is that the external sector will prove weaker than it has in previous years when portfolio inflows, loan proceeds, foreign direct investments, tourist receipts and similar sources of foreign funds reached record levels, according to the BPI president. “So we’re in a cocoon. But I think at some point the [foreign funds flows] are going to affect us externally. We will still have growth this year but it is not going to be as strong as in 2010," he said. – MRT/VS, GMA News