Outlook for Philippine remittance cloudy in 2012

Remittance growth has been surprisingly resilient over the last few months despite worries about a slowdown in the developed nations and unrest in the Middle East (the effects have been shrugged off). In seasonally-adjusted terms, MoM growth averaged 1.9% in the six months ending August. The figure is a significant improvement from negative or flat growth in the early part of 2011. For the first eight months of the year, total remittance was up by 6.9%, led by a 10% increase from Asia, followed by an 8.4% increase in Europe. Remittance data for September is to be watched for any impact resulting from a month of financial market volatility.

Beyond the short term, the remittance growth outlook remains cloudy amid slower global growth in 2012. Structurally, it is unlikely for the country to return to a consistent period of double-digit remittance growth seen from 2002-2008 as global growth was stronger. For this year, remittance growth will likely be around 7% (down from 8.2% in 2010) and may dip a bit further in 2012.