In the Philippines, Overseas Filipino Workers (OFWs) are widely regarded as modern-day heroes. Their sacrifices and hard work in pursuit of a better life for themselves and their families earned the respect and admiration of the Filipino people.
Aside from that, Filipino migrant workers also play a significant role to promote economic growth through their remittances. These funds are a lifeline for many households in the country and help to support the education, healthcare, and basic needs of millions of Filipinos.
Hitting Higher Numbers
Overseas Filipino Workers’ (OFWs) remittances hit an all-time high in December last, closing the year 2022 with higher hopes of economic growth for 2023. The strong finish of OFWs was recorded at $36.14 billion, with a significant increase of 3.6 percent from 2021’s $34.88 billion.
One of the main contributors for the robust remittance inflows is the higher demand for foreign labor supply as the effects of the pandemic slowly wears out while the economy reopens, according to the Bangko Sentral ng Pilipinas (BSP).
The Philippines is the fourth highest recipient of inward remittances, with a majority coming from the U.S. (41.2%), Singapore (7%), Saudi Arabia (6%), and Japan (5.1%). The remaining percentages are shared by the United Kingdom, UAE, and Canada, respectively.
Moreover, according to the report, cash remittances sent via banks rose from $2.99 billion to $3.16 billion, enjoying a 5.8% increase.
“OFW remittances, at new record highs on a monthly basis, are bright spot for the Philippine economy in terms of spurring consumer spending, which accounts for at least 75 percent of the economy, and in turn, support faster economic growth,” says Michael Ricafort, chief economist at Rizal Banking Corporation as stated in an article of PhilStar Global.
Effects of Remittances in the Philippine Economy
Overseas Filipino Workers (OFWs) play a significant role in the Philippine economy, contributing greatly to the country’s growth and development. According to Compare Remit, here are the major impacts of OFW remittances to the Philippine economy:
Balance of Payments
Balance of payments, in simple terms, is the overall record of a country’s transactions to other nations. It consists of imports and exports of goods and services, as well as transfer payments like foreign and local remittances. A surplus is when a country’s total export count is higher than its imports while it is considered as deficit when a country imports more goods.
When a county experiences a deficit, one of the important components to help narrow down the gap are the remittances sent back by foreign workers.
According to an article published by the Philippine News Agency, economists are eyeing for an upward motion in the economic growth as the country’s Gross International Reserves (GIR) continue to rise from USD98.2 billion to USD100.2 billion.
This can further attributed to the constant influx of remittance inflows send by our Overseas Filipino Workers. Foreign reserves play an important role in the economy by helping in the rise and fall of prices.
As we all know, exchange rates indicate how a currency performs against other currencies. The high influx of OFW remittances strengthens the power of the Philippine peso, which in return provides the following benefits: lower costs of imported goods, helping curb the nation’s debts and increasing the value of Philippine peso against other currencies.
The remittances sent by an Overseas Filipino Worker back to his or her family contributes to their overall household income. A higher household income means people have higher ability to spend. Furthermore, higher spending means driving the local economy forward.
Standard of Living
In relation, as the household income, for instance of an OFW family, increases, so does its standard of living. This means that there is enough income to support their elevated way of life. In addition, having a higher disposable income further fuels the growth of the retail industry.
Remittances in 2023: Driving the Property Sector Growth Upwards
Aside from its significant contribution in driving the Philippine economy, OFW remittances are expected to boost the property sectors this 2023.
According to Santos Knight Frank Chairman and CEO Rick Santos, the property buying appetite of most OFWs balloons this year as migrant workers prioritize buying horizontal and vertical properties, mainly for strengthening their investment portfolio purposes. He further states that OFWs and migrant workers take advantage of the arbitrage of property prices in different market segments, investing on those that are light on the pockets but yield higher returns.
Moreover, the agency also poses a positive outlook in the industrial and logistics sectors of real estate, REITS, and even residential and office. Prospects for data centers and renewable energy are highly-anticipated this coming year.
The agency also states that the hospitality and retail sectors will benefit greatly in 2023. With the ease of pandemic restrictions, people are expected to go out more, quenching their thirst to travel from being confined in their homes. This phenomenon is referred to as ‘revenge travel.’
Taking this outlook into account, it’s best for OFWs to capitalize on investing in condominium properties that will double up as ‘condotels’. Purchasing properties near tourist destinations then converting it into a staycation rental business is a sound option too as it will garner a high occupancy rate during peak season.
The Filipinos working abroad face numerous challenges, including separation from loved ones, cultural differences, and often working in difficult and dangerous conditions. Despite these challenges, they continue to persevere and send money back home to support their families and communities.
Their selflessness and dedication to their families have earned them the admiration and respect of the Filipino people. They are often praised for their unwavering commitment to their families, their resilience, and their willingness to make personal sacrifices for the betterment of their loved ones.
OFWs are regarded as modern-day heroes in the Philippines due to their dedication, resilience, and significant contributions to the country’s economy. They have earned the respect and admiration of the Filipino people and are recognized as an essential part of the country’s growth and development.
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Vista Land International Marketing, Inc. (VIMI) is the international marketing division of Vista Land. Aiming to provide OFWs and migrant Filipinos a home in the Philippines, VIMI has established long-lasting relationships with brokers and clients around the world.