The reported weakness of the local currency the peso in recent months has helped preserve the purchasing power of recipients of overseas remittances at precisely the time when the volume of cash sent by Filipino migrant workers has slowed.
This was noted by Nicholas Antonio Mapa, research officer at the Bank of the Philippine Islands, who brushed aside worries over the impact of the slowing flow of remittances from some 10 million overseas Filipinos worldwide.
“Overseas Filipino remittances posted a decelerated pace of growth at 3.6 percent year to date, scaring the socks off credit-rating agencies and investors…. The slowdown in the US dollar value of remittances in the past few months translates into healthy peso growth, which is all that’s important for Philippine consumption,” Mapa said.
The total cash remittances sent home by Filipino migrant workers in the first 11 months last year hit $22.83 billion, up by 3.6 percent from the $22.031 billion reported in the same January-to-November period in 2014.
“The chart shows a slowdown in US dollar terms but the growth in peso terms continues to be solid at 8 percent. I think this is the more important growth number as it will gauge how much peso purchasing power Filipinos will be available to drive our growth engine,” the research official said. “Even if there will be more slowdowns in US dollar growth in the next few months given the recent events, the peso growth may still remain solid,” he added.
Remittances continue to be one of the pillars of the Philippine economy as it helps build a cushion of foreign exchange as buffer against external volatilities. The remittances also help fuel consumption spending on the domestic side. Analyst alarm bells rang when remittances started to posting unsteady growth in 2015, adding to remittance apprehension by overseas Filipino workers in the Middle East whose continued stay were to be affected by the political turmoil and falling oil price in the region.
Data from the central bank show remittances from the Middle East totaling $5.243 billion over 11 months last year, about a fourth, or 23 percent of aggregate remittances of $22.83 billion.
Last November alone, remittances from the Middle East grew by 9.6 percent from a year earlier.
“True, trouble in the Mena [Middle East and North Africa] region may result in late salaries and possible layoffs for migrant labor, but Filipinos have always found a way to send home remittances for their loved ones, come hell or high recession, so never count them out,” Mapa said.