Remittances, business process outsourcing revenues and electronics exports will generate more than $67 billion worth of inflows this year, British bank Standard Chartered said Tuesday.
Standard Chartered said in a report the current account of the Philippines would continue to draw strength from the sustained remittances from overseas Filipino workers despite the threats of slower inflows amid the sluggish global growth.
“We expect that remittance growth is likely to be much slower than before as the number of outgoing workers stabilize and overseas income is impacted by a sluggish global economy, particularly in the west which accounts for a significant chunk of remittances,” Standard Chartered economist for Asia Chidu Narayanan said.
“Even so, we expect remittances to continue to add more than 6 ppt [percentage point] to the current account surplus [as a percentage of GDP] in the medium term. In addition, we expect BPO services exports, remittances and electronics exports to support the current account surplus, accounting for more than $67 billion of inflows [21 percent of GDP] this year,” Narayanan said.
Bangko Sentral data showed that the surplus in current account fell to $0.8 billion in the first half from $5.3 billion posted a year ago.
Standard Chartered also said the information technology-business process outsourcing sector would be the biggest contributor to the current account inflows by 2017, overtaking remittances.
Remittances and BPO revenues account for around $50 billion inflows annually. Meanwhile, electronics exports last year reached $26 billion, or 44.3 percent of total merchandise exports.
Remittances in August this year increased 16.3 percent to $2.319 billion from $1.954 billion a year ago, driven mainly by transfers from land-based workers. The expansion was a sharp reversal from the 5.4-percent decline in July this year. This was also the fastest expansion since the 16.6-percent rise recorded in March 2014.
This brought cash remittances in the first eight months to $17.642 billion, up 4.6 percent from $16.868 billion a year ago. The 4.6-percent growth in the first eight months already matched the expansion last year and surpassed the conservative 4-percent growth projection by Bangko Sentral this year.
About 80 percent of cash remittances came from the United States, Saudi Arabia, the United Arab Emirates, Singapore, the United Kingdom, Japan, Qatar, Kuwait, Hong Kong and Germany.
Cash remittances grew 4.6 percent to a record $25.767 billion in 2015 from $24.628 billion in 2014. The total remittances accounted for around 10 percent of GDP last year.
Bangko Sentral Deputy Governor Diwa Guinigundo earlier expressed optimism the country’s external payments position would remain strong on sustained robust business process outsourcing revenues.