Increasing savings rate by OFWs noted

Manila Bulletin
December 1, 2005

Increasing savings rate by OFWs noted

The rising growth rates in financial services (15.6 percent) in the third quarter, as compared to the 9 percent a year ago is an indication of an increasing savings rate by families of overseas Filipino workers (OFWs).

"It seems that families of OFWs are not splurging on the sums remitted, as seen in the steady rates for consumption," said Socioeconomic Planning Secretary Augusto Santos.

The implied savings may augur well for the growth in consumption and investment in 2006, said Santos.

Santos is optimistic the strong performance of the financial sector for the third quarter of this year will be carried forward.

"The ratio of non-performing loans to total portfolio in the banking sector has been declining, which is 9.4 percent as of August 2005 compared to 13.9 percent in the same period last year," he said.

The demand-side of the economy continues to be consumption-led.

Personal consumption expanded 4.8 percent, buoyed by the strong dollar inflows from abroad.

Growth in remittances from foreign-based workers offset the impact of oil prices. As of September 2005, remittances reached US$7.9 billion.

"They are at all-time high, and projected to hit $10.3 billion for the whole year. The amount does not include money sent outside the banking system," he said.

On the other hand, public consumption declined as government tightened its rein on fiscal expenditures.

Capital formation slumped ­2.9 percent as businesses held back on investments on account of the political discord, which peaked during the third quarter and the rising prices of oil.(EHL)