More OFW families saving money amid global slump

MARK JOSEPH H. UBALDE, GMANews.

MANILA, Philippines - More families of overseas Filipino workers (OFWs) are keeping a tight grip on their loved ones’ remittances amid fears of tougher times this year.

Food and household needs remain the top expenses of OFW families, the latest survey of the Bangko Sentral ng Pilipinas (BSP) said.

But at the same time, households opting to save their precious dollars have significantly increased, the BSP said.

Families that allotted portions of remittances to savings climbed to 40 percent from Jan to March this year, compared with only 35.8 percent in the fourth quarter of 2008, BSP figures said.

OFW beneficiaries who allotted a portion of their remittances for investments also rose slightly, the central bank said.

“In a sense, the greater proportion of remittances recipients saving and investing is good for the economy because the multiplier effects can be significant in the future," said BSP deputy governor Diwa Guinigundo.

But Guinigundo is not too keen about promoting savings especially in a volatile climate where boosting economic activity remains key.

“[Having the scope for higher savings] does not mean of course that we should discourage consumption expenditure in the economy," Guinigundo said. “Consumption sustains higher level of economic activity."

Filipino economist Winnie Monsod had earlier echoed Guinigundo’s concern that fearful consumers who would rather save than spend would create a slowdown in product demands and would eventually trigger more layoffs.

The shift from splurging to saving in OFW households was likely the result of pessimism over the country’s economic prospects, the BSP study revealed.

The last time OFW families had a high-time splurging their money was in November 2008, when the peso slightly weakened against the greenback.

But Benjamin Diokno, a former budget secretary and now an economics professor at the University of the Philippines, warned OFWs about overspending amid an uncertain economic climate.

Instead of throwing cash away in midnight bazaars and mall-wide sales, Diokno said OFW relatives should better prepare for the worst.

He said that it would be safest for OFWs to invest only after six months to wait out the effects of the economic crunch.

“Kung pwede ‘wag na lang muna nilang ipadala dito (If possible they should not remit first)," Diokno said in an earlier interview. “At this time, ‘cash is king.’" - GMANews.TV

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