MANILA -- Cash flows from overseas Filipino workers (OFWs) are expected to grow around 6 percent to 7 percent this year, according to the Metrobank Research’s Weekly View from the Metro.
In its report, Metrobank Research said remittance flows have not shown any signs of slowing down as they almost reached $1.7 billion in January, and that the 8-percent year-on-year increase is the fastest growth for that month since 2010. The growth in remittances was also a significant jump as January remittance levels are historically the lowest within a year.
The growth, according to the research unit, is expected to have an upside bias based on higher expected OFW deployment and improving external economic conditions.
Metrobank Research said the robust flows at the start of the year may set the stage for faster remittance growth in 2013, and that the improving US economic performance may also drive faster remittance flows for the year.
It added that the US serves as the highest contributor with 43 percent of remittance flows coming from the country last year. And despite ongoing problems in Europe, Metrobank Research added, a slightly better outlook for other major host countries may provide support.
1It said the resilience of remittances is expected to drive consumer-based industries, as OFW-backed families continue to have high spending capacities.
Amid the appreciating peso, Metrobank Research noted, manageable inflation may still support the purchasing power for these families, and that the latest central bank survey showed that food is still the top consumption item for OFW households.
It said the percentage of households that use remittances for savings have also improved to 39.5 percent in the fourth quarter last year from 36.8 percent.
Metrobank Research added that it expects food and beverage companies, hotels and restaurants, and real-estate firms to maintain their strong growth as consumption spending remains upbeat.
It said it also remains optimistic that the Philippine peso will continue its strength against foreign currencies amid the uncertain outlook for currency markets. “The peso is still seen to remain strong this year amid peso-positive factors like solid international reserves, robust OFW remittances and strong economic growth.”
Metrobank Research said fluctuations in global risk appetite will remain a fundamental driver of exchange-rate movements, and that there are many other events on the horizon that have the potential to cause turbulence in foreign-exchange markets this year.
It added that the possibility of renewed financial turmoil in peripheral euro zone will remain a constant threat in the background, capable of erupting whenever data cast doubt on economic recovery or fiscal-consolidation prospects.