OFW remittances, BOP surplus to sustain PHL economic growth – economist

Robust growth in the remittances of the Overseas Filipino Workers (OFWs) as well as surplus in the country's balance of payments (BOP) will continue to sustain the country's economic growth, a senior economist of a multinational bank said Tuesday, despite last month's decline in the gross international reserves (GIR). "[The] Philippines is likely to show some modest strength despite the large month-on-month drop in FX (foreign exchange) reserves for January," explained ING Bank Manila senior economist Joey Cuyegkeng. "Data on the country’s external payments position would likely support the Philippines.” ING Bank Manila is a wholly-owned subsidiary of Dutch company, ING Bank NV. Last month, the Bangko Sentral ng Pilipinas (BSP) reported a $2.286 billion cash remittances from OFWs for November 2013 --9.5% higher than the $2.087 billion recorded in November 2012. The BSP said the November 2013 figure brought cash remittances for the first 11 months of last year to $20.605 billion, or 6.1 percent higher than the $19.417 billion in the same period of 2012. "Data on December OFW remittances comes out next Monday (Feb. 17). Resilient remittances should help support sentiment for the Philippines," Cuyegkeng said.   BOP surplus Meanwhile, the country's BOP remains in surplus at $5.085 billion, higher than the $4.4 billion projected by the BSP for 2013. The surplus in the country's BOP was recorded despite uncertainties brought by the Federal Reserve’s easing of its monetary stimulus last year.   The BOP is a summary of all the transactions of a country with the rest of the world. Items computed in the BOP includes OFW remittances, revenues from exports and imports, foreign investments, tourist receipts and revenuers from the business process outsourcing sector, among others.   A negative BOP means that more money is flowing out of the country than coming in, and vice versa. A surplus in the BOP adds to the country’s GIR. Cuyegkeng said sustained growth in these two indicators would help the country sustain its economic growth  despite the 5.16% decline in the country's foreign exchange reserves or GIR announced by the BSP last week. GIR position According to the BSP the Philippines' GIR dropped to $78.9 billion in January from $83.2 billion in December 2013. The BSP said this is the GIR's lowest position since the $76.129 billion recorded in June 2012. An ample GIR shields the country from external shocks such as inflation. Just last week the National Statistics Office (NSO) reported that the Philippine inflation hit its two-year high in January at 4.2 percent from 4.1 percent in December 2013 and 3.1 percent in January 2013. However, in a press statement issued on Feb. 8, BSP governor Amado Tetangco Jr. said the country's foreign reserves of approximately $20 billion will remain adequate over the "optimal level" even if the government spends a large amount for its debt services. He said the January reserves could even cover 11.3 months' worth of imports of goods and services and income.   Tetangco said part of the decline was due to debt services by the national government.   "It is a fairly large amount of debt service payments (made) in January," he said in a statement. Another reason cited by Tetangco was the drop in foreign exchange operations of the BSP, which hit $1.377 billion from $1.6 billion in December. However, the BSP's gold holdings recovered to $7.7 billion from $7.5 billion a month ago.   For 2014, the BSP targets GIR to hit $88 billion as current accounts were expected to continue to be in surplus. — Elizabeth Marcelo/ DVM, GMA News