MANILA, Philippines - Remittances from overseas Filipino workers (OFWs) would continue to grow this year as the Arroyo administration pushed for bilateral agreements for the deployment of more workers abroad.
The consensus projection made by private analysts since the beginning of the year indicated that remittances are generally expected to decline by as much as 20 percent this year as the global economy struggle to prevent job losses.
The government expects remittances to only match last year’s inflow of $16.4 billion and central bank officials based its balance of payments projections on this assumption.
According to the latest Market Call Research of First Metro Investment Corp. and the University of Asia and the Pacific, however, they expect remittances to be sustainable despite the lingering global economic crisis.
Remittances actually continued to grow, albeit slowly, rising by 2.2 percent in April, slightly lower than 3.1 percent in March.
“Even so, it can also be observed that OFW remittances for the first four months of the year now stands at $5.5 billion, up by 2.6 percent from last year’s levels,” the report noted.
Although remittances rose by 2.2 percent, the report said inflows were steady and despite the minimal growth rate, it was still on track. “It is defying consensus that OFW remittances will register significant negative growth this year,” the report said.
“Sustained demand for our migrant workers in different countries continues to help keep up these inflows of OFW remittances,” Market Call said.
“Moreover, with the government’s employment deals with several countries in need of our workers – the risks from the continuing global economic recession affecting the remittances are being tempered,” the report added.
The research report cited the Japan-Philippines Economic Partnership (JPEPA) which led to the deployment of an additional 273 health workers to Japan. More importantly, the initial adverse trends in labor deployment have also shifted.
“Even the rise in retrenchments of OFWs has abated,” the report said.
In peso terms, the Market Call report said the small 2.2-percent growth of OFW remittances in April translated to a huge 17.9 percent growth. However this rate was below the 20-percent mark, indicating a slowdown.
The Market Call Report said the slowdown resulted not only from the deceleration in the growth of remittances in dollar terms but also from the half-percent appreciation of the peso in March to April.
However, even central bank officials were not willing to call it either way, especially since there are underlying indications that remittance inflows could really decline for the first time in history.
Data from the Bangko Sentral ng Pilipinas (BSP) indicated that remittances from the US declined by 10 percent in the first four months of the year and if this continued for the rest of the year, total remittances could post the first decline since the country started sending workers abroad.
From January to April, remittances from the US reached only $2.286 billion, accounting for nearly half of the $5.498-billion total remittances for the period this year.
BSP data indicated that the four-month level was 10.43 percent lower than the $2.552-billion level posted over the same period in 2008, with the largest decline recorded in sea-based remittances which dropped by 16.15 percent.
Out of the total remittances coming from the US, inflows from sea-based workers accounted for $635.83 million while land-based workers accounted for $1.917 billion.
The BSP has been careful about breaking down remittances that come from the US since these also include inflows that only pass through the US financial system but do not actually originate from US-located Filipinos.
A clearer indicator, according to the BSP data, were remittances that came from land-based workers which presumably represented workers located in the US as well as immigrants.
Nevertheless, inflows from both sources showed a decline in the first four months, indicating that if the trend continued for the remainder of the year, total remittances could decline as expected by everyone except the BSP.