OFW Remittances Boost Economy’s Outlook
Buoyed by surging remittances from Overseas Filipino Workers (OFWs), consumer sentiment improved moderately in this year’s first quarter, raising prospects of better times ahead.
Based on the Bangko Sentral ng Pilipinas (BSP survey, overall confidence index (CI) showed an upbeat trend because of some positive indicators spawned by a resilient economy.
These range from availability of more jobs to increase in the number of employed family members and the emergence of more investment prospects.
Consumer confidence is measured using three indicators–economic conditions of the country, family financial situation and family income.
By income group, consumer sentiment was mixed with respect to their views on family finances and income.
The low-income group showed a consistently more favorable outlook, but the middle-income group’s outlook weakened, but turned more bullish for the next quarter and the year ahead.
In the same BSP survey, the high-income group had a less upbeat outlook but anticipated financial conditions to improve in the next twelve months. Across income groups, confidence on the economic condition of the country improved.
The survey results also showed that the number of households with savings continued to pick up at 28.9 percent in Q1 2014 compared to 26.2 percent in the previous quarter.
Consistent with the higher spending outlook on basic goods and services in Q1 2014, consumers anticipated higher inflation in the year ahead. They expected the inflation rate to settle at 8.4 percent compared to 7 percent in Q4 2013. This indicates that inflationary expectations could be stronger in the next 12 months.
Respondents are also of the view that the peso would depreciate against the US dollar in the next 12 months. Their perception could have been influenced in part by the recent weakening of the peso against the dollar.
Of the 560 households included in the BSP survey that received OFW remittances in Q1 2014, 97 percent used the remittances that they received to purchase food.
More than two-thirds (68.9 percent) of the OFW households allocated part of their remittances for education, 62.9 percent for medical payments and 45.9 percent for debt payments.