What are remittances and its importance?
Answer (1)
Remittances are funds sent by migrants or Overseas Filipino Workers (OFWs) back to their families in their home country. For the Philippines, remittances are a vital part of the economy. Every year, billions of pesos enter the country through these transfers.Importance of RemittancesSupport for Families – OFWs help their families buy food, pay for education, build homes, and get medical care.Economic Growth – The money gets spent in local businesses, increasing demand for goods and services.Foreign Exchange – Remittances add to the country’s supply of foreign currency (like US dollars), helping stabilize the exchange rate.As of 2023, remittances contribute around 9–10% of the Philippines’ GDP, making it one of the top countries in the world in terms of dependence on remittances. Countries like India, Mexico, and Pakistan also rely heavily on these flows.Remittances are considered transfer payments, meaning they are not in exchange for any product or service—they are pure money transfers. While they help many families escape poverty, too much reliance on them may reduce the urgency for local job creation.
