How Remittances to the Philippines Help Cultivate Economic Growth
2.2 Million Filipinos are Working Overseas
Remittances sent by overseas Filipinos are among the major drivers of our country’s economic growth. As of September 2012, there is an average of 2.2 million Filipinos working abroad. In 2014, personal remittances sent through formal channels, such as banks and iRemit to the Philippines, amounted to $26.924 billion, states Bangko Sentral ng Pilipinas. A huge portion of the Philippines’ foreign currency comes from remittances.
What are the Impacts of Remittances to the Philippines’ Economy?
A Major Driver of the Country’s Consumer Spending
Remittances from Filipinos abroad provide numerous Filipino households with the ability to purchase commodities. According to Bangko Sentral ng Pilipinas, the remittances sent by overseas Filipinos are mainly used for basic necessities. Most households spend remittances on food, education, and medical expenses. Thus, remittances help increase domestic consumption. Domestic consumption is a key component of economic growth. Increased consumer spending means higher revenues for companies, which may eventually lead to the creation of more jobs.
Stronger Philippine Peso
Dollar remittances sent by Filipinos working overseas greatly contribute to a stronger Philippine peso. A stronger currency can help our government repay our country’s debts. Since majority of the Philippines’ debts is in U.S. dollars, a stronger peso can help lessen our debts.