Thursday, 29 October 2009

PHILIPPINES: Contribution of remittances to GNP seen shrinking

REMITTANCES SENT by Filipinos overseas, which now account for 10 percent of the gross national product, may no longer contribute as much to the economy seven years from now.

This was according to state-owned Development Bank of the Philippines, which said the economy needed to prepare itself for the time when it would no longer receive a substantial boost from the money sent by overseas Filipino workers.

“Currently, remittances are a major growth driver and it will continue to be in the next seven years. After that, however, things may change,” Reynaldo David, DBP president and chief executive officer, told reporters Thursday.

David was one of the speakers during a business forum organized by the Association of Development Financing Institutions in Asia and the Pacific [ADFIAP].

Over the medium to long term, he said, more and more OFWs and their families were expected to live permanently in their host countries. As a result, he said, remittances sent to the Philippines would likely shrink.

By the time that happens, he said , the Philippines should have already strengthened its economy and that growth would be sustained even with less money sent from abroad.

Currently, remittances contribute about 10 percent of the country’s GNP and fuel consumption, which accounts for 70 percent of the gross domestic product.

GNP is the sum of the values of goods produced and services rendered by Filipinos, both here and abroad. GDP is the sum of the values of goods produced and services rendered within the country, both by Filipinos and foreigners. Read more

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