October 15, 2014

OFW remittances up 7.2% in August

Quoting data from the Bangko Sentral ng Pilipinas (central bank), The Philippine Star today reported that remittances from overseas Filipino workers sustained its growth pace. In August, OFW remittances climbed 7.2% YoY to $2.3b from $2.1b last year. This brought the eight-month total for OFW remittances to $17.2b or 6.5% higher YoY. The article quoted the BSP as saying that the strong demand for skilled Filipino workers overseas remained the key driver in the sustained growth of remittances flows.

Our take: The sustained growth in OFW remittances is so far on-track to exceed the BSP’s 5% target. However, we are not ruling out a possible deceleration towards the end of the year in contrast to previous years as the data will be coming off a high base last year. Recall that remittances got an extra boost late last year (on top of the usual holiday-related rise) amid the reconstruction following the destruction brought about by the super typhoon Yolanda.

The sustained strong growth in remittances also comes at an opportune time when crude oil prices are dropping steeply that can ease inflationary pressures. Combined with the recent weakening of the peso (in face of the strong dollar), the higher remittance growth should bode well for consumer purchasing power.

This can aid domestic consumption especially towards the holiday season which bodes well for consumer companies, fast-food companies, and mall operators. This can also provide an extra boost to residential property sales which normally pick up towards the fourth quarter of the year. – WealthSec