DUE TO UNCERTAIN TIMES IN EU, US; More families save part of remittances

Uncertain times are encouraging families receiving remittances to save more. A survey done by the Bangko Sentral ng Pilipinas showed that of the 544 households surveyed during the second quarter of the year, the percentage of those that save part of their remittances rose from 42.7 percent to 44.5 percent.

The BSP traced this to uncertainties in Europe and elsewhere where Filipinos are working.

BSP deputy governor Diwa Guinigundo said more families are now more aware of having to put the money they receive to good use.

The survey showed that 95 percent used remittances for food. Those that utilized their remittances for education increased to 67.7 percent from 66.1 percent in the second quarter of 2011.

More than half of the households (57.8 percent) surveyed allocated part of their remittances for medical payments and 44.1 percent for debt payments.

The percentage of households that apportioned part of their remittances to buy houses and lots, consumer durables and motor vehicles decreased compared with the first-quarter 2012 results.

Likewise, those that apportioned part of their remittances for investment dropped quarter on quarter, from 8.5 percent to 5.0 percent.

Remittances have been increasing in the past 10 years, boosting consumption spending which is more than 60 percent of the country's GDP.

But the growth level this year is slightly slower than last year's as the uncertainties in Europe and the US affect OFs.

Total remittance inflows from OFs rose 5.3 percent year on year in April versus 5.0 percent in March, translating into total inflows of $6.5 billion for the first four months of the year.

Sequentially, remittances rose 3.7 percent month on month in April, in comparison to a 1.7 percent contraction in March.

HSBC economist Trinh Nguyen said that although remittances picked up in April from the previous month, the year-on-year rate of expansion remains below the average pace of 2011.

"After expanding more than 7 percent last year, total remittances sent home by overseas Filipinos decelerated to a year-to-date growth rate of 5.4 percent," Nguyen said.

Nguyen explained that the slowdown reflects tough conditions in host countries, especially the eurozone.

"For the same period last year, remittances rose 6.0 percent. The slowdown reflects challenging conditions in host countries, especially the eurozone, where inflows contracted from January to March," Nguyen said.

However, Nguyen said that given the typical resilient nature of Philippine's remittance inflows, they still expect a 5.4 percent pace of expansion for this year.

The BSP also sees remittances growing 5 percent this year.

The central bank said that remittance flows were sustained by the steady demand for Filipino workers abroad as well as the expanded access of overseas Filipinos and their beneficiaries to a diverse and innovative range of financial products and services offered by banks and other financial institutions.

Preliminary data obtained from the Philippine Overseas Employment Administration (POEA) indicated that workers classified as new hires with processed contracts and are awaiting deployment rose 16.5 percent to 85,009 for the period January-February 2012 from 72,941 in the same period last year.

Meanwhile, for the first five months of the year, approved job orders aggregated 334,945, of which about a third or 100,848 consisted of processed job orders for service, professional, technical, and production and related workers who are intended for deployment to Saudi Arabia, the UAE, Qatar, Kuwait, Taiwan, Singapore and Hong Kong.


Source: Jimmy C. Calapati, Malaya Business Insight, 20 June 2012
Link: http://www.malaya.com.ph/index.php/business/business-news/6666-due-to-uncertain-times-in-eu-us-more-families-save-part-of-remittances