More money to run economy thanks to remittances, BPO revenues and demographics

Rafael Algarra Jr., Executive Vice-president and Financial Markets Segment Head of Security Bank, said in a statement that despite a number of natural calamities in the later part of 2013, the economy of the Philippines managed to grow 6.5 percent in the fourth quarter of 2013 and that the current position of the Philippine Peso versus the dollar will stay the same for the first six months of 2014.

The Peso is currently at P44 to P45 against the dollar, backed by the strong consumer and government spending, as well as by the continuous dollar inflow. Algarra noted that the brief period when the Peso hit the P45 level was just a temporary stint and was only a marginal effect caused by emerging markets.

The executive added that should emerging markets panic again, the effects on the country will be minimal, if not less. Meanwhile, the Philippine Dealing and Exchange Corp. stated that the Peso destabilized nominally recently, from P44.58 to P44.63.

Remittances and BPO revenues

The bank executive also noted that after the huge outflow last January, the Philippines will retain its positive position, thanks to the strong supply of remittances and income from BPO operations. There are more dollars coming in than money being spent in the country and that will help strengthen the Peso between P43 and P44.

"We look at it in a perspective where more dollars are coming in than coming out and that should help the peso strengthen between P43 and P44," he added.

Remittances in 2013 grew by 6.4 percent to USD 22.760 billion – better than the central bank projection of 5 percent.

Strong Consumer Spending

Algarra said this will boost consumer spending, while the number of those entering the working age population grows.

"People talk about exports but the Philippines is very strong in terms of consumer spending. The demographics of the Philippines in terms of age is perfect, with people coming in to a productive stage of their lives," he said, noting that the average age in the country is 20 to 24 years old,” Algarra said.

Apart from remittances and demographics, the Philippines remains a bright spot among emerging markets given its strong macroeconomic fundamentals.

"The Philippines is in a sweet spot if you look at economic data. There's good growth, low inflation and good fiscal position," Algarra added.

More money to run economy

Despite a number of natural calamities in the later part of 2013, the economy managed to grow 6.5 percent in the fourth quarter, helping the full-year output to expand by 7.2 percent or above government's growth goal of 6 to 7 percent.

The Philippine government now has more money to front run some spending to get the economy growing.

Source: GMA news online