Continued Higher Remittance Growth

PHILIPPINES - In Brief 16 Oct 2013 by Romeo Bernardo

The BSP reported today continuing above-forecast growth in remittances from Filipino workers overseas.  Personal remittances, which include transfers in cash or in kind, continued to exceed $2 billion for the fifth consecutive month in August, equivalent to a 7.4% yoy growth.  The bulk of this consists of cash remittances coursed through banks, totaling $1.9 billion, an increase of 6.8%. By both measures, year-to-August remittance growth remained above the BSP's 5% full-year forecast, with cumulative cash remittances summing up to US$14.5 billion during the period.  We note some acceleration in remittance growth in the July-August period (7.4% for personal remittances and 6.6% for cash) compared with 1H2013 (6.2% and 5.6%, respectively) which should be positive for 3Q13 consumption and GDP.  This is especially true after factoring in the 4% peso depreciation during the quarter, which would bring remittance growth in peso terms above 10% for both measures. Moreover, the steady remittance growth is a constant reminder of the country's robust current account position, helping to bolster the economy's defenses against external turbulences.

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