OFW remittances, BOP surplus to sustain PHL economic growth, as joblessness grows

OFW remittances, BOP surplus to sustain PHL economic growth – economist

 Jobless Filipinos hit 12.1M, SWS: Unemployment rate rose to 27.5% in Q4


Robust growth in the remittances of the Overseas Filipino Workers (OFWs) as well as surplus in the country's balance of payments (BOP) will continue to sustain the country's economic growth, a senior economist of a multinational bank said Tuesday, despite last month's decline in the gross international reserves (GIR).

"[The] Philippines is likely to show some modest strength despite the large month-on-month drop in FX (foreign exchange) reserves for January," explained ING Bank Manila senior economist Joey Cuyegkeng. "Data on the country’s external payments position would likely support the Philippines.”

ING Bank Manila is a wholly-owned subsidiary of Dutch company, ING Bank NV.

Last month, the Bangko Sentral ng Pilipinas (BSP) reported a $2.286 billion cash remittances from OFWs for November 2013 --9.5% higher than the $2.087 billion recorded in November 2012.

The BSP said the November 2013 figure brought cash remittances for the first 11 months of last year to $20.605 billion, or 6.1 percent higher than the $19.417 billion in the same period of 2012.

"Data on December OFW remittances comes out next Monday (Feb. 17). Resilient remittances should help support sentiment for the Philippines," Cuyegkeng said.

BOP surplus

Meanwhile, the country's BOP remains in surplus at $5.085 billion, higher than the $4.4 billion projected by the BSP for 2013. The surplus in the country's BOP was recorded despite uncertainties brought by the Federal Reserve’s easing of its monetary stimulus last year.

The BOP is a summary of all the transactions of a country with the rest of the world. Items computed in the BOP includes OFW remittances, revenues from exports and imports, foreign investments, tourist receipts and revenuers from the business process outsourcing sector, among others.

A negative BOP means that more money is flowing out of the country than coming in, and vice versa. A surplus in the BOP adds to the country’s GIR.

Cuyegkeng said sustained growth in these two indicators would help the country sustain its economic growth  despite the 5.16% decline in the country's foreign exchange reserves or GIR announced by the BSP last week.

GIR position

According to the BSP the Philippines' GIR dropped to $78.9 billion in January from $83.2 billion in December 2013. The BSP said this is the GIR's lowest position since the $76.129 billion recorded in June 2012.

An ample GIR shields the country from external shocks such as inflation. Just last week the National Statistics Office (NSO) reported that the Philippine inflation hit its two-year high in January at 4.2 percent from 4.1 percent in December 2013 and 3.1 percent in January 2013.

However, in a press statement issued on Feb. 8, BSP governor Amado Tetangco Jr. said the country's foreign reserves of approximately $20 billion will remain adequate over the "optimal level" even if the government spends a large amount for its debt services.

He said the January reserves could even cover 11.3 months' worth of imports of goods and services and income.

Tetangco said part of the decline was due to debt services by the national government.

"It is a fairly large amount of debt service payments (made) in January," he said in a statement.

Another reason cited by Tetangco was the drop in foreign exchange operations of the BSP, which hit $1.377 billion from $1.6 billion in December. However, the BSP's gold holdings recovered to $7.7 billion from $7.5 billion a month ago.

For 2014, the BSP targets GIR to hit $88 billion as current accounts were expected to continue to be in surplus. — 11 Feb 2014 DVM, GMA News

**************************************

MANILA, Philippines—The number of unemployed Filipinos in the last quarter of 2013 swelled to more than 12 million, making the 7.2-percent growth in the country’s gross domestic product (GDP) last year, considered the second-fastest after China, far from inclusive.
The unemployment rate rose to 27.5 percent, or an estimated 12.1 million individuals, as 2.5 million Filipinos joined the ranks of the jobless between September and December, a Social Weather Stations (SWS) survey found.
The level of joblessness across the country was almost 6 points higher than the 21.7 percent (some 9.6 million) in the previous quarter, results of the SWS survey conducted from Dec. 11 to 16 showed. The results were first published in BusinessWorld.
Nikka Policarpio, 19, who graduated from the University of Santo Tomas last year with a degree in journalism, is among the millions of unemployed.
Nearly a year after college, Policarpio is already in between jobs since she left her first job last month as a marketing communications specialist.
“I have been applying at different media companies for less than a month now… I want to take a rest before I start working again,” said Policarpio, who resigned from her nine-month stint with a cosmetics company because the low compensation did not match the heavy workload.
The high unemployment rate despite the high GDP growth may have contributed to the pessimistic outlook of Filipinos last December.
A survey by another polling outfit, Pulse Asia, found that 55 percent of Filipinos felt the national quality of life deteriorated in the past 12 months. They also expected the situation to remain the same for the whole of 2014.
‘Understandable’
Malacañang on Monday described as “understandable” the findings of the SWS survey.
Presidential spokesman Edwin Lacierda pointed to calamities that hit the country last year to help “explain” why unemployment rate increased to 27.5 percent at the end of 2013.
Lacierda cited Super Typhoon Yolanda (international name: Haiyan), which devastated central Philippines last November, and the 7.2-magnitude earthquake that hit Bohol and Cebu provinces a month earlier.
According to the Geneva-based International Organization for Migration, some 6 million workers saw their livelihood destroyed or disrupted as a result of Yolanda.
Lacierda said the siege of Zamboanga City by Nur Misuari’s followers “also disrupted” economic activity in the area.
“Certainly, it’s very unfortunate that these things happened, but we have to rise up. That is the role of government: to provide for its people,” he said.
‘Bloodied but unbowed’
“We were bloodied but unbowed,” Lacierda added, borrowing the words of William Ernest Henley’s poem, “Invictus.”
Despite the increase in the unemployment rate, Lacierda said the government would “continue to ensure that our people find employment.”
The latest jobless rate, however, was below the 34.4 percent posted in March 2012.
The unemployment rate has mostly remained over 20 percent since May 2005, according to SWS. It was under 15 percent from 1993 to March 2004, and was within 16.5 percent to 19 percent from August 2004 to March 2005.
Different definitions
The SWS definition of unemployment covers respondents aged 18 and above who are “without a job at present and looking for a job.” This excludes those not looking for work such as housewives, students and retired or disabled persons.
This is different from the official definition in the Labor Force Survey (LFS), which covers persons 15 years and over who are reported not working, looking for work and available for work.
The government’s latest LFS put the official unemployment rate at 6.5 percent (about 2.6 million Filipinos) as of October 2013.
The SWS survey also found that 40 percent of respondents believed there would be more jobs in the next 12 months, 31 percent claimed the number of available jobs would remain the same, while 21 percent expected fewer jobs.
Unemployment picked up sharply among men (from 13.4 percent to 21.2 percent) but remained higher among women (from 32.4 percent to 35.9 percent).
Highest among 18-24
Across age groups, joblessness remained highest among those 18-24 years old (52.3 percent). It was 33.1 percent in the 25-34 age bracket, 25 percent in the 35-44 age bracket and 17.7 percent among those 45 years old and older.
The nationwide unemployment included those who were retrenched (10.4 percent), resigned from their jobs (13.5 percent), and first-time job seekers (3.5 percent).
‘Endo’
Of those retrenched, 6.8 percent did not have their contracts renewed (also called “endo” or end of contract, usually after six months so that the workers won’t be regularized and the employer won’t pay benefits), 1.6 percent had employers whose businesses ceased operations and 2 percent were laid off.
The survey, which used face-to-face interviews with 1,550 Filipinos, had a margin of error of plus-or-minus 2.5 percentage points.—PDI Reports from Rafael L. Antonio and Kathleen de Villa, Inquirer Research; and Christian V. Esguerra February 10th, 2014