MANILA, Philippines – Bangko Sentral ng Pilipinas (BSP) officials ruled out the possibility that remittances would decline this year but admitted that inflows would not increase for the first time since the country started deploying workers abroad.
BSP Deputy governor Diwa Guinigundo said yesterday it is true that the emerging economic depression in developed economies is costing overseas Filipinos their jobs
According to Guinigundo, reports from the Philippine Overseas Employment Authority (POEA) indicated that an increasing number of Filipino workers are being sent home as their employers began to cut jobs to lower costs.
Guinigundo said there was a marked loss of jobs for Filipino workers in the US and Taiwan, traditionally two of the country’s biggest market of labor exports since the early 1970s, along with Middle Eastern countries like Saudi Arabia and United Arab Emirates.
Job losses in offshore labor markets have led to projections by some economists that remittances would actually decline this year and some estimates projected a plunge of as much as 20 percent.
But Guinigundo said the deployment of Filipino workers is still rising by double-digit rates, at least for the time being. He said this would partly offset the decline in remittances caused by the loss of jobs in other job markets.
Guinigundo said that if deployment is rising by 20 percent, remittance inflows would have enough off-setting force to maintain at least the same level of remittances as 2008.
“We don’t believe remittances would drop to negative growth,” Guinigundo said. “At the very least, we are expecting a zero growth.
Until this year, remittances from overseas Filipinos have been growing annually at double-digit rates and Guinigundo admitted that if the growth rate was to drop drastically, it would “put some strain” on the country’s dollar supply.
Guinigundo said this would, in turn, put pressure on the country’s balance of payments but said this would be offset by the central bank’s liquidity facility that uses ROP bonds. He said inflows into the foreign currency deposit units (FCDUs) would also help.
Earlier, a report from HSBC indicated that it is expecting an unprecedented 20-percent decline in remittances from overseas Filipinos this year because of the sheer severity of the plunge in global growth.
HSBC’s forecast was supported by the projections made by the International Monetary Fund (IMF) which said that rising unemployment in migrants from labor-exporting countries would become the main concern for this year.
IMF managing director Dominique Strauss-Kahn said developed economies alone are expected 50 million unemployed people in 2009 and there is no reason why emerging Asia would avoid unemployment as the consequence of slow growth.
Unfortunately, Strauss-Kahn said, remittances account for an increasing large part of revenues in emerging economies .
“Of course, the slowdown in the economies where those people from different nationalities go to work may diminish the remittances,” he said.
On the other hand, Hongkong-based HSBC senior economist Frederic Neumann said the economy has so far fared better than most countries as the global economic turmoil came into full swing this year.
Neumann noted that the economy still managed a 4.5-percent growth in the fourth quarter of 2008, making the Philippines one of the best performers in the region.
According to Neumann, headline remittance numbers also held up but said this would not be sustained this year despite its history of resilience even through the global slowdown in 2001.–Des Ferriols, Philippine Star