remittances

BETING LAYGO DOLOR MANILA

The Philippine political scene may still be messy,
but the economic picture is much brighter. As 2006
ended and 2007 began, most of the country’s
economic indicators were decidedly upbeat.

At the heart of the strengthening economy are the
millions of overseas Filipino workers and Filipinos
permanently living abroad.

Their remittances are projected to grow by another
16 per cent this year, just like last year.

The US$12 billion in OFW remittances boosted the
country’s dollar reserves which as of end-2006
stood at US$23 billion.

Such data indicates that there is some basis to the
claims of the administration of President Gloria
Macapagal Arroyo that the rest of the world is not
getting a clear picture of the Philippine situation,
including Filipinos based abroad.

Among the bright indicators:

• The Philippine peso is at a six-year high vis-à-vis
the US dollar;

• The Philippine Stock Exchange index is at a nine-
year high; and

• Inflation is at a two-year low.

For foreign investors, the gauge as to the strength or
weakness of any economy is usually its stock
market.

For the year just past, P57.2 billion was raised
through stock offerings in the PSE. This was the
biggest level since 1994, when the Philippines was
in the middle of its five-year growth spurt during the
Ramos era that brought the country to “tiger cub”
status in the region.

The PSE had all but collapsed in the late 1990s
when it was learned that a crony of then President
Joseph Estrada had manipulated the prices of a
speculative stock. Estrada reportedly received hefty
commissions from the act.

Last year, investors finally returned in a big way.
Net foreign buying in the bourse in 2006
skyrocketed by 191 per cent, to P68.53 billion from
the previous year’s P23.53 billion.

“The market’s superb performance in 2006 is proof
that economic reforms being implemented by the
government, specially its efforts to manage the
budget deficit, tame inflation and stabilize interest
rates, have once again paid off,” PSE president
Francis Lim said recently.

The return of business confidence is expected to
pay dividends this year, but no one is betting on
exactly how much.

National Economic and Development Authority
(Neda) director general Romulo Neri said he
expects gross national product – the sum total of all
goods and services produced by the country
inclusive of dollar remittances from OFWs – to hit 6
per cent this year.

But Neda policy planning director Dennis Arroyo
said this was probably “a conservative estimate.”

Among the industries enjoying strong earnings are
the manpower export sector (slightly more than one
million workers were deployed last year, and a
similar level is expected this year), construction
(which unexpectedly experienced double digit
growth), call centers (steadily expanding outside
Metro Manila thereby boosting some regions) and
medical tourism (which is being counted on to
double the 2.5 million inbound tourists of last year).

The US$12 billion in
OFW remittances
boosted the country’
s dollar reserves
which as of end-
2006 stood at
US$23 billion

Tutuban Mall in Divisoria teems with shoppers. Hope is high among Filipinos across all
classes as the economy continues to rimprove, driven by record remittances from OFWs.

OFWs power strongest surge in 11 years

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