MANILA, Philippines – Families of overseas Filipino workers (OFWs) are saving more from their income mainly due to the hard and difficult times arising from the deepening global economic and financial meltdown, the Central Bank of the Philippines reported.
The bank said that in its latest survey of OFW families, food continues to account for the bulk of total household expenses funded mainly by remittances, which in 2008 totalled a whopping $16.4 billion.
But the bank said the percentage of households that allotted portions of remittances to savings increased to 40 percent in the first quarter of 2009, compared to only 35.8 percent in the fourth quarter of the 2008 survey.
In the first quarter survey, the bank said 94.7 percent of OFW households spent their remittances primarily on food and other household needs while 69.8 percent spent their remittances on education.
The bank added that households that spent on medical expenses accounted for 55.2 percent while those that spent on debt payments represented 48.5 percent.
“In a sense, the greater proportion of remittances of OFW families saving and investing is good for the economy because the multiplier effects can be significant in the future,” said Diwa Gunigundo, the bank’s deputy governor.
Gunigundo stressed the shift was likely the result of growing pessimism over the country’s economic prospects which compelled OFW families to save and invest rather than spend on consumables.
Gunigundo explained that savings and investments increase the pool of resources available to both households and corporate borrowers for their credit needs.
“That helps sustain economic activity,” the bank official pointed out.
He also admitted that compared to neighboring countries, the savings rate in the Philippines are very low.
But, at the same time, Gunigundo said the bank is wary of encouraging savings at a time when the economy would need sustained and increased in spending to support economic activities that would cushion the impact of the global slowdown.
Nevertheless, he said consumption expenditure could also be supported by higher savings and investment that, in the future, would give the consumer more and higher stream of future income.
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