Global remittances outpace ODA inflows – WB study

Global remittances from overseas workers and migrants are outpacing the inflow of official official development funds, a World Bank study showed.

In the study, the World Bank said the approximately 200 million migrants around the world will likely send home $283 billion this year, 6.7 percent higher than the $265 billion remitted in 2007.

These remittances are coursed through the bank and non-bank financial sector and global money transfers companies, and do not include those coming from informal channels, the World Bank said.

In contrast, official development funds have been averaging more than $100 billion annually.

“Remittances will prove more resilient than capital flows or perhaps even official aid between now and 2010,” World Bank economist Dilip Ratha noted.

In the Philippines, remittances are expected to reach $16 billion this year from $14.4 billion in 2007. Remittances from overseas Filipinos have been growing in double digits for several consecutive years.

There are concerns, however that remittances may slow down next year to single-digit growth as several host countries are starting to tighten the noose on migrants. Globally, the growth rate of remittances is expected to slow down next year to just one percent from 6.7 percent this year.

Nonetheless, remittances still form a significant portion of developing countries’ gross domestic product (GDP).

Remittances account for nearly half of the GDP of Tajikistan and a third for Moldova and Tonga. In the Philippines, remittances contribute a little over 10 percent to GDP.

This year, more than one million Filipinos were deployed to various destinations worldwide for various jobs, adding to the eight million OFWs already scattered globally.

Ratha said migrants’ incomes are affected by the global economic slowdown but falling commodity prices and the rising US dollar have increased the purchasing power of remittances, allowing migrant workers to send less home, but with a similar impact.

“Despite a possible decline in the share of remittances in GDP, the contribution of remittances to the external position of developing countries will increase significantly during 2009-10,” the study added.

Studies show that migrant workers even in hard-hit sectors like construction continue to send money home even if their own earnings are reduced. The average value of remittances sent by Mexican migrants has remained in the $340-$350 range per transaction since 2005.–Ted P. Torres, Philippine Star