Philippine's December remittances pegged to hit 6.6% growth

2012 growth may stand pat at 6.1%.

According to DBS, remittance numbers for December are due and 6.6% YoY growth is expected. This will take full-year growth for 2012 in USD terms to 6.1%, a fairly respectable growth rate considering the headwinds that have been buffeting the global economy. 

This has served as a cushion during times of risk aversion and outflows. Moreover, these transfer payments also help to fund the trade deficit.

From an external accounts perspective, having sizable remittance is a strong positive for stability and enables the current account to stay in a firm surplus position.

Here's more from DBS:

However, in terms of boosting local spending power, the impact is not as large. Steady economic growth in 2012 and changing foreign investor perception have accelerated inflows into the country, resulting in a strengthening peso.

As a result, remittance growth in PHP terms is expected to reach just 3.7%. This pattern has been repeated over the past 10 years. In fact, remittance growth in PHP was the strongest during the global financial crisis in 2009 when the currency weakened sharply against the greenback.

In times of steady global growth, peso strength tends to erode remittance purchasing power.