MANILA, Philippines – The robust inflows of remittances from Filipinos abroad will continue to support the country’s balance of payments position and private consumption, Singapore-based DBS Bank said.
In a research note, the bank said despite remittances rising at a slower rate of 5.2 percent in April, the four-month total has already reached $7.392 billion.
“Even if (it) has slowed, at the current pace, OFW remittances are still likely to reach $24 billion by year-end,” DBS said.
This forecast is somewhat in line with the expectations of the Bangko Sentral ng Pilipinas, which sees remittances growing by five percent this year over the $22.968 billion in 2013.
DBS said remittances will remain a key driver for the current account component of the country’s balance of payments position.
“The strong external balance has been a key positive for the economy in recent years, and S&P also reiterated this point when it upgraded its rating on the Philippines back in May,” the bank pointed out.
The country’s BOP position settled at a surplus of $5.085 billion last year, with a current account surplus summing up to $9.4 billion as propped up by remittances from Filipinos abroad and an increase in profits of the business process outsourcing sector.
This year, the central bank has forecast a BOP surplus of $3 billion, with a current account surplus of $10.4 billion.
“And not only that, strong OFW remittances will continue to prop up domestic growth. Note that while private consumption is resilient, there are some risks on the inflationary front,” DBS said.
Remittances provided a big boost to the country’s economy, particularly for driving domestic consumption, as it made up 8.4 percent of the country’s gross domestic product.