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Philippines, despite being a small country with 100 million population, is the fourth highest remittance receiver in the whole world, just after India, China and Mexico
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Effect of international remittance on the Philippine economy
Philippines, despite being a small country with 100 million population, is the fourth highest remittance receiver in the whole world, just after India, China and Mexico. There are innumerable overseas Filipinos permanently settled in another country or stay as overseas workers for a limited period of time. Whatever be the visa category of Philippines in the foreign country is, they contribute big bucks to the Philippine economy.
Overseas Filipinos send money to Philippines to their loving families and friends residing in the home country, this undoubtedly boosts the GDP of the country, among many other added advantages. In earlier days, US and Middle Eastern countries were the favourites of Filipinos, as these countries offered numerous construction and manufacturing jobs for males. Now the trend has changed, and Filipinos (male and female) are migrating to Canada, Australia etc. as nurses, doctors and other health-related jobs.
Coming back to how the remittance flow helps the Philippine economy, here is how? Substantial Balance of Payments: Balance of payments is a tallying between the money spent and money earned by a country. A surplus amount of money denotes that the country has earned more money than spent and the deficit is the direct opposite. Remittance has a huge impact on balancing these payments, as remittance inflow heightens the money earned.
Exchange Rates: Exchange rates denote the value of one currency against another currency of a different country. The stronger the currency is the cost of imported goods and services diminishes making it easy for the customers to purchase. Overseas remittances help to build the worth and value of the currency. Philippino Peso gained its worth through remittances.
Foreign Reserves or Gross International Reserves(GIR): GIR is actually the sum of all foreign exchanges, including foreign investments, imports and exports etc. Within GIR of Philippines, international remittances are the second-largest source of foreign reserves, first being the exports.
Household Income: Monthly income of a family comprises of domestic incomes and international remittances. Some families in Philippines, have remittance as their sole source of income that is utilized for all family expenses. Whether it is a sole income or not, remittance forms a fixed larger portion of the Philippines family monthly income.
As a conclusion, it can be said that international remittance flows have a positive impact on the Philippine economy. It helps to bridge the wealth gap between poor and rich to an extend. Thus, international money transfers boost the economy of a country beyond imagination.
