DBS Bank of Singapore expects remittances from overseas Filipino workers to post another record high this year, saying the higher flows will further boost consumption and cushion the impact of the widening trade deficit.
DBS said in a report Tuesday money sent home by Filipinos working overseas was likely to surpass the $27-billion mark, which is not far from Bangko Sentral ng Pilipinas’ estimate of $28 billion this year, or a 4-percent growth from $26.9 billion in 2016.
Latest data from Bangko Sentral showed remittances recovered in May, growing 5.5 percent to $2.310 billion from $2.188 billion a year ago, on sustained demand for local skilled workers abroad.
The May expansion was a reversal of the 5.9-percent decline in April. This brought cash remittances in the first five months to $11.346 billion, up 4.5 percent from the $10.859 billion a year ago.
“… At the current pace, total remittances for the year may exceed $27 billion, another record-high for the economy. This is important not only for the positive impact it has on personal consumption growth but also as a counter to the widening trade deficit,” DBS said.
Bangko Sentral last month kept a conservative 4-percent growth target for remittances this year amid the improving trade and rosy outlook of the global economy. Bangko Sentral Deputy Governor Diwa Guinigundo said the 4-percent expansion would translate into a record $28 billion in remittances from the $26.9 billion posted in 2016.
Bangko Sentral in December last year projected remittances to rise 4 percent in 2017. The regulator reviews the growth target for remittances, alongside other economic data, twice yearly in May and November.
Remittances together with business process outsourcing receipts account for around $50 billion in inflows annually and have been the source of the country’s strong external payments position.