MANILA - Remittances posted the highest year-on-year growth over the past 8 months in July as the economy started to show signs of recovery from the global crisis.

The Bangko Sentral ng Pilipinas (BSP) reported on Tuesday that the country's remittance inflows rose 9.3% in July, the highest growth since the 10.5% recorded in November 2008. Remittances have still been growing during the past months, but the pace of growth has slowed to less than 5% compared to double-digit increases in the previous years.

Money sent home by overseas Filipino workers (OFW) reached $1.494 billion in July, slightly lower than the record $1.498 billion in the previous month. This brought the country's total remittance inflows to $9.973 billion for the first 7 months of the year, a 3.8% rise from the $9.608 billion recorded in the same period in 2008.

BSP Governor Amando Tetangco said the growth was driven mainly by sustained demand for Filipino labor abroad, as well as wider access to remittance services offered by banks and other financial institutions. Citing a report from the Philippine Overseas Employment Administration, the central bank said less OFWs were displaced during the period as the global economy starts to recover from the crisis.

"Given sustained remittance flows at the onset of the second half of the year and continuing signs of improving global economic conditions, remittances are anticipated to remain stable for the remainder of 2009 and will continue to be a major growth driver of the economy," Tetangco said in a statement.

During the 7-month period, the BSP said the country's major source of remittances were the United States, Canada, Saudi Arabia, United Kingdom, Japan, Singapore, United Arab Emirates, Italy, and Germany.

On Monday, Tetangco said he is expecting remittances to grow 2% to 3% this year, higher than its previous flat growth estimate. In 2008, remittances reached $16 billion.

Remittances are a major indicator of where the local economy is heading. They drive consumption, which fuels the engine of the economy usually more than government spending does. Accounting for about 10% of domestic output, they also stabilize the peso and keep the balance of payments in surplus.

Local companies also watch the pace of remittance growth for their own business and investment strategies. Fastfood giant Jollibee Foods Corp., for instance, has expressed concern that the slow rise in remittances for the past months may impact the company's sales this year. - By Karen Flores, abs-cbnNEWS.com, with a report from Reuters