THE steady but slightly slower remittances from overseas workers in the first half of the year should not be a cause for worry for the Philippines, an economist said.
Bank of the Philippine Islands economist Nicholas Mapa said in an e-mailed response to the BusinessMirror that the absolute value of remittances in the first half of the year will still continue to support the country’s external position and consumption.
While remittances hit a six-month high in June this year, as reported by the Bangko Sentral ng Pilipinas, its cumulative growth rate is at 5.8 percent, lower than the 6.6-percent growth in the previous year.
Likewise, monthly growth rates were also lower in the first half of this year, compared to that of the previous year.
Mapa said the possible reason behind the lower remittance growth for this year is the weaker value of the peso against the US dollar in 2014, compared to that of 2013.
“Remittances continue to flow back to the Philippines despite it slowing marginally for most months in 2014. Although this may be trivial, the US dollar-Philippine peso rate was slightly lower in 2013 and, thus, overseas Filipinos needed to send home dollars to compensate for peso consumption,” the economist explained.
The local currency traded relatively stronger in the first half of 2013, but then weakened to settle at the 43-to-44 territory this year, owing to global uncertainties. The government assumes that the peso will likely end the year at the value of 42 to 45 to a dollar.
“In 2014, with the exchange rate favoring dollar earners,” Mapa added, remittances remain one of the pillars of the local economy, as it is known to keep the country’s balance of payments afloat at a surplus level despite blows of economic uncertainties in the global front.
Money sent home by Filipino migrant workers also speed up local consumption, which, in turn, provides support for the country’s gross domestic product.