A group of Filipina domestic workers in Hong Kong. Remittances from overseas workers are a mainstay of the Philippines economy. Dale De La Rey/ AFP
A group of Filipina domestic workers in Hong Kong. Remittances from overseas workers are a mainstay of the Philippines economy. Dale De La Rey/ AFP

Remittances remain crucial to Philippines economy



The Philippines is becoming less export-dependent in the usual sense of the term as domestic consumption and investment expand.

But one "export" that remains critically important is the outflow of Philippine workers to overseas countries from where they send home huge total cash remittances.

These remittances from countries literally all over the world to where Filipinos fan out in search of work in services or industry were worth US$26.9 billion in 2016 - which was equal to almost one half (48 per cent) of the $56bn of total merchadise exports during the year.

Middle East countries are the second-biggest source of foreign remittances to the Philippines (after the United States and the Americas), followed by those from Asian countries and from Europe

"There was some economic upset last year in the Middle East", which is a popular destination for overseas foreign workers or "OFWs" as they are known in the Philippines, notes Aekapol Chongvilaivan, the country economist in the Philippines office of the Asian Development Bank.

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He cites the case of Qatar as an example. "Last year we had some worry that if some workers were sent back to the Philippines it might affect foreign worker remittances but in the fist half of this year that has not happened," Mr Chongvilaivan tells The National.

In the January to June period of 2017 "we have seen quite stable remittances and one interesting thing is that the Philippine peso is quite depreciated now, which means the same amount of [local currency] remittances are actually higher amounts in pesos", he adds.

Total remittances back to the Philippines from OFWs reached just over $16bn in the first half of this year, some 5 per cent up on the comparable period in 2016, says the national statistics agency. Most of this amount - $12.8bn - came from land-based workers and some $3.3bn from maritime Filipino workers, according to the ADB

Middle East nations were the source of $4.3bn of total remittances (or some 27 per cent) with Saudi Arabia being the biggest component of these remittances at $1.5bn and the UAE coming in second biggest at just under $1.4bn.

Only the US beats Middle-East as a source of Phillipine foreign remitances with a contribution of some $5,4bn in the first half of this year. In the case of the US, Filipinos working as ship crews account for more than one third of remittances

OFWs working in other Asian countries (many of them as domestic helpers) produced almost $3bn of Philippine remittances in the first half of 2017 or 19 per cent of the total, while from European countries the contribution was $2.2bn or 14 per cent.

"It should be highlighted that the sources of remittances from OFWs are quite well diversified, making remittances resilient to uncertainties in [individual] regions" such as the Middle East, Mr Chongvilaivan says.

Overseas remittances from Filipino workers to their families in the Philippines help to finance consumption and, in that sense, they can be seen a  "driver of domestic demand" in the country, adds Christopher Wood, the managing director and equity strategist at Hong Kong-headquartered brokerage and investment group CLSA.

So the personal sacrifices Filipinos make to, in many cases, leave family behind for many years to work abroad, is a source of benefit for their home country and, in turn, for the relatives who remain.

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