Remittances from overseas Filipino workers (OFW) are seen to accelerate by over 8 percent this year on the account of the improving global economy, particularly in the United States and Europe, Standard Chartered Bank said.
“We expect remittance growth to accelerate in 2014 from the 6-percent print in 10 months 2013,” the bank said in a report titled “Philippines—Remittances get an external boost.”
The bank said that it expects an increase of 2 percent to 2.5 percent in remittance growth in 2014, on top of the 6-percent growth in the 10-month period of 2013, making its 2014 remittances projection at 8 percent to 8.5 percent.
Ten-month remittances data released by the Bangko Sentral ng Pilipinas (BSP) showed that OFW remittances reached $20.5 billion, posting a growth of 6.8 percent from the year-ago level.
Standard Chartered said that it is likely that the Philippines will benefit from increased remittance inflows from two of its major sources—the United States and Europe.
“We expect global growth to accelerate to 3.5 percent in 2014, versus our forecast of 2.7 percent in 2013, owing mainly to stronger growth in the US and Europe,” it said.
The bank estimated a 1.5-percent point to 2-percent point increase in remittance flows, largely on increased inflows from the US and Europe, in 2014.
Meanwhile, Standard Chartered noted that remittance growth will continue to translate into solid domestic household consumption that will underpin gross domestic product (GDP) growth.
“Remittance inflow growth has lagged GDP growth in recent years. The Philippines is moving from being a consumption-led economy to one also driven by domestic investment. Nonetheless, overseas workers’ remittances remain an important component of the economy,” it said.
The bank also expects increased remittances following Super Typhoon Yolanda to have a positive impact on remittance growth during the remainder of 2013 and in early 2014.
It estimated remittance growth to increase by 0.5-percentage point in 2014, mainly in the first quarter, on inflows for post-disaster reconstruction efforts.
For its part, the BSP said that cash remittances may reach P23.6 billion, growing 5 percent this year.