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Typhoon Haiyan remittances could top expectations

Relief workers prepare to transport food aid from the port in devastated areas following the recent super typhoon on November 18, 2013 in Tacloban, Leyte, Philippines.
Getty Images
Relief workers prepare to transport food aid from the port in devastated areas following the recent super typhoon on November 18, 2013 in Tacloban, Leyte, Philippines.

In the aftermath of Typhoon Haiyan, the flood of money transfers, or remittances, from friends and relatives is expected to increase significantly for Philippine families affected by the super typhoon.

Remittances already play a significant role in the Philippines economy, especially for lower income households receiving money from relatives abroad.

(Read more: Philippines growth misses, storm damage to weigh)

"Remittances provide a lifeline" said Deli Ratha, Manager of Migration and Remittances Unit at the World Bank and last month the World Bank projected that remittances to Philippines would reach over $25 billion, or one-tenth of GDP, in 2013.

Since the impact of Haiyan, these payments will become an even more crucial lifeline for those living in the affected area.

Gwendolyn Pang, secretary general of the Philippine Red Cross, stressed how remittance funds are a crucial part of the disaster aid donation system.

"We do not have a clear picture of the figures - but there is obviously a huge boost in contributions and money sent to the Philippines through remittances"

Western Union, one of the largest money transferring operators worldwide, said that they have seen an "overwhelming response from around the world to support family and loved ones" in the aftermath of Typhoon Haiyan and they have launched zero-fee money transfer from 43 countries until 30 November into the Philippines to encourage remittance payments.

(Read more: Will typhoon Haiyan derail the Philippine economy?)

Looking at reactions to previous disasters, Nomura predicts a 'substantial near-term' pick up in remittances. Since 2004 the bank found that within 3 months of a calamity, remittances growth increased by 3.7pp from growth rates prior to the incident.

But Guntur Sugiyarto, a Senior Economist at Asia Development Bank speculates that figures could exceed those seen in previous natural disasters in the Philippines.

Manila-based Sugiyarto argues that the fast growing use of social media and the proximity of the Christmas season means that this time remittance flows will be unprecedented

Social media played a crucial role in the media coverage of the disaster - showing pictures taken on camera phones to global audiences days before traditional media channels could get to the area. Google also launched a 'People Finder' program to allow loved ones to reconnect after the storm.

(Read more: Typhoon was our 'Black Swan:' Philippine exchange COO)

Sugiyarto expects that instant, global access to the images of destruction -- combined with the timing of the festive season -- means that the Philippine Diaspora community will make more remittance donations in the coming months.

Speaking to CNBC on Thursday morning, Philippine Finance Secretary Cesar Purisima said that although the damage assessment is preliminary and ongoing, rebuilding costs to the affected area are expected to cost in excess of $6 billion and many years of rebuilding and rehabilitation in the process.

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