The growth in cash being sent home by Filipinos abroad through banks is expected to further pick up in July as more workers were deployed overseas, London-based economic research firm Capital Economics said.”Growth in the US dollar value of remittances picked back up in May and June, following a contraction in April. We expect that the latest pick up will continue as a strong global environment helps to support the demand for Filipino workers abroad. Indeed, data show that the number of workers deployed abroad has grown at a rapid pace so far this year,” Capital Economics said in a report.
Capital Economics expects year-on-year growth in cash remittances in July to hit 6.5 percent, faster than the 5.7 percent posted in June. The government will release the latest remittances data on Friday.
“In particular, with the economic slowdown in the Middle East now approaching a trough, remittances from the region should continue to recover going forward,” it said.”The upshot is that remittances are set to pick up further over the coming quarters. Alongside growth in business outsourcing and tourism revenues this should help to keep the country’s current account deficit in check,” it added.
The Bangko Sentral ng Pilipinas earlier attributed the increase in cash remittances in June to a three-month high of $2.467 billion from $2.334 billion a year ago to sustained deployment of overseas Filipino workers.
“The sustained increase in overseas Filipinos’ remittances was supported by stable demand for skilled Filipinos abroad. Preliminary data from the Philippine Overseas Employment Administration showed that for the period January to June 2017, the total number of deployed OFWs reached 1,140,226, which is already more than 50 percent of the total number of OFWs deployed for the year 2016 at 2,112,331,” BSP Governor Nestor A. Espenilla Jr. had explained.
Cash remittances were expected to hit a record $28 billion by yearend.
The BSP had maintained the 4-percent remittances growth target for 2017, although the value of the updated projection made in June was higher than the earlier forecast of $27.7 billion.
In 2016, cash sent home by overseas Filipinos through banks reached a record-high of $26.9 billion, up 5 percent from 2015’s $25.6 billion.
Remittances are the country’s largest source of foreign exchange income, insulating the domestic economy from external shocks by ensuring the steady supply of dollars into the system.
Also, these cash transfers are a major driver for domestic consumption, hence contributing to strong economic growth.
text BEN O. DE VERA
This article was originally published on Inquirer.net