Many people in underdeveloped countries leave their homes and families behind to migrate and seek employment abroad. They capitalize on the opportunity to move more freely in a globalized world, but large amounts of their higher incomes flow back to their families in the form of remittances.
Philippines hugely depends on remittances sent by millions of OFWs working in different parts of the world. Even today, people are considered to be the top export of this country.
Overseas Filipino Workers or OFWs make up for one of the largest group of expat workers in the world. OFW remittances still provide the growth that matters most in the lives of Filipinos. They go straight to households, to relatives, families and friends that use them to better their lives, to finance food, shelter, education and entrepreneurial pursuits. Money transfers from Filipinos working all over the world account for at least 10-percent of the country’s GDP, the second largest source of foreign capital after value-added exports like electronic components, and a major source of private consumption which in turn accounts for 75-percent of the GDP.
The impact of remittance on the Philippines economy goes beyond GDP. OFW remittances have contributed to a positive impact on the country’s earnings of foreign exchange. By substantially adding to the country’s earnings in foreign exchange, these remittances have contributed to the strengthening of the nation’s balance of payments position, bolstering the surpluses on current accounts.
The receipt of remittances increases the total incomes of the recipient households. If the households have any sources of domestic incomes, this adds a large boost to its disposable income. With more income, household consumption rises. This goes in different directions – from basic needs toward an improved consumption basket of food, clothing, leisure, and then some luxuries. Hence, most families enjoy an improvement in their standard of living. An important element of this phenomenon is the impact on the typical household’s educational choices. Families have better opportunities for higher quality education for their children, which is probably one of the most crucial impacts of OFW remittances on the economy.
Millions of OFWs use Xpress Money to send money to their families back in the Philippines. With instant transfers, low transfer fees, zero backend charges and the largest agent network in the Philippines, Xpress Money is a brand that aims at helping OFWs make the most of their hard earned money.
This blog has been updated in May 2019