MANILA: After Lyn Lyn Rael’s three-room house was swept away by Super Typhoon Haiyan, leaving her husband and five children homeless, she borrowed 25,000 pesos ($570), the equivalent of two months’ wages, from her employer in Singapore to send to her family.
“They’re all depending on me,” the 30-year-old nanny, who comes from Maghubas village in Leyte province in central Philippines, said by phone. “I had to leave the country two years ago to make money to pay for my kids’ education and for our rice farm. Now to add to it, I need to rebuild our house.”
Remittance growth rose 3.7 percentage points in the three months after past major disasters, Nomura Holdings said in a note this month, using data from seven calamities since 2004. Annual transfers from 10.5 million overseas Filipinos like Rael are equivalent to about 10 percent of gross domestic product, according to World Bank estimates, underscoring the nation’s reliance on these funds even with the fastest expansion among Southeast Asia’s biggest economies.
“Calamities highlight the Philippines’s dependence on remittances to finance domestic consumption, with the affected families turning to their relatives working abroad for help,” said Trinh Nguyen, an economist at HSBC Holdings in Hong Kong, who forecasts the funds could rise 6 percent this year. “Unless the government succeeds in creating more jobs at home, Filipinos will still need to travel abroad to have better employment opportunities and this dependence will persist.” The Philippine Stock Exchange Index has fallen more than 6 percent since the Nov. 8 typhoon swept away coastal towns and destroyed an entire city in the Visayas group of islands. The peso dropped about 1.5 percent in the same period.
Damage to residential, commercial and agricultural properties is estimated at $6.5 billion to $14.5 billion, catastrophe modeling firm AIR Worldwide said Nov. 18. The storm left more than 5,000 dead and displaced 3.4 million.
The World Bank forecast in October that remittances to the Philippines will rise 5.7 percent this year to $26 billion. Overseas Filipinos rushing to send money to families affected by Haiyan will boost funds over the next few months, according to HSBC, UBS AG, Credit Suisse Group AG and Barclays Plc.
Remittances are 9.8 percent of GDP in the Philippines, according to World Bank estimates that were updated in October. Based on data released by Bangko Sentral ng Pilipinas, funds sent through banks totaled more than 8 percent of GDP in 2012.
In the world’s third-largest recipient of remittances, the funds are the biggest source of foreign exchange after exports, and help boost local consumption, supporting sales of companies including Vista Land & Lifescapes Inc. and Jollibee Foods Corp. Remittances ro se 5.8 percent in the January-to-September period from a year earlier, according to the central bank.
The Philippines avoided a recession during the 2009 global economic slump as remittances helped counter a slide in exports, even as neighboring economies from Singapore to Thailand contracted. The number of workers from nurses to engineers leaving the Philippines increased 12.6 percent last year to a record 2.08 million, even as GDP grew 6.8 percent from the previous year, the fastest pace since 2010.
“Philippines does depend on its remittances, which is inevitable given the economic opportunities within the country are limited,” the Asian Development Bank’s Managing Director- General Rajat Nag said in an interview Nov. 22. The “economy needs to get more diversified.” Philippine President Benigno Aquino, named by Time magazine as one of the world’s 100 most influential people this year, has overseen an economic revival with growth exceeding 7 percent for four straight quarters. The nation this year won investment- grade scores from Moody’s Investors Service, Fitch Ratings and Standard & Poor’s.