Following the steep fall in January, economic analyst are putting their stakes on call centers in the Philippines and overseas Filipino workers (OFW) to usher the recovery of the gross international reserves (GIR), as finance giant Citi sees inflows of these two sources to rapidly surge.
Citing the corporation’s research, Citi director and economist Jun Trinidad said that OFW remittances and revenues of the information technology and business process outsourcing (IT-BPO) industry will be recurring in nature.
Trinidad added that he can’t say the same for massive net outflows including unwinding portfolio positions and external debt repayments. This means that the country’s foreign exchange reserves will soon experience a lift.
“If the remittance and BPO flows are assumed to be recurring, GIR s recent compression should have been mitigated. But GIR surprised on the downside to suggest strong net outflows other than the reporter portfolio net outflows,” the economist said.
Trinidad referred to the GIR’s sharp decline to $78.939 billion in January after registering at $83.187 billion in December 2013.
“GIR stock fell in 2013 by $644 million despite having a strong combination of OFW remittance flows and IT-BPO revenues. In January, GIR fell by $4.25 billion - a record monthly drop,” Trinidad explained.
He pointed out how last year’s $22.76-billion OFW remittances surpassed previous annual records of the central bank by upping 2012’s $21.391 billion by to 6.4%.
IT firms and call centers in the Philippines showed a similarly robust performance by growing the IT-BPO sector’s revenues by 17% to $15.5 billion in 2013, a figure that gives greater promise to the industry’s $20-billion revenue target in 2016.
“Payment of external liabilities among the banks and non-banks may have accelerated particularly during weak peso episodes that implied added pressure, although external debt payments data have yet to be reported.” Trinidad remarked.