OFW inflows remain strong amid crisis

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) said its zero-growth remittance projection for 2009 is now considered conservative, with inflows growing by 2.7 percent in the first quarter of the year.

BSP Governor Amando M. Tetangco Jr. said remittance inflows are still positive, reflecting the double-digit increase in the deployment of new workers abroad that easily offset job losses and wage cuts.

Because of the strength of remittance inflows as well as the initial resilience of the country’s exports that Tetangco said might not fall as much as expected, the BSP had also started reviewing its balance of payments forecast for the year.

The BSP’s 2009 BOP forecast pegged a $700-million surplus by yearend – not so much when compared to 2006 and 2007 levels but significantly better than the 2008 surplus of $88 million.

“We are still projecting a surplus about $700 million, but we will review that,” Tetangco said.

According to Tetangco, the $2.2-billion surplus in the first four months resulted from the decision of the National Government to frontload its borrowings from both commercial and official development assistance (ODA) sources.

“But there will be foreign exchange requirements by the end of the year,” Tetangco pointed out. “We have to look at the improvements in inflow, particularly considering the impact of the improvement in risk appetite that could put funds back in emerging markets.”

Tetangco also expressed optimism that there would be improvements in the global economy by the second half of the year and this could mean exports would not plummet as badly as expected.

“So there could be slower decline in exports in second half,” he said.

Remittance inflows, however, are still the most-watched indicator because these funds have not registered a single annual decline since the country started sending workers abroad.

If ever, this would be the first time in history that remittance inflows would be so hard-hit by the global recession that inflows would actually decline, although the government itself was expecting only a zero growth this year.

Analysts have been projected the first decline in remittances ranging from a high of 25 percent to the 7.5-percent decline projected by the International Monetary Fund (IMF).

Despite a marked slowdown in the annual growth rate, remittances from overseas Filipinos reached a record-high $1.47 billion in March, bringing the first quarter total to $4.057 billion.

Inflows from Filipinos overseas continued to defy gloomy predictions indicating a dramatic decline in remittances this year as a result of job displacements and wage cuts as a result of the global economic slowdown.

But data from the BSP showed that although there was a significant deceleration in remittance growth, the actual level of inflows still managed to break past record highs.

Although initially reluctant to admit an official policy of exporting workers, the Philippine government has been more aggressively marketing Filipino workers and financing education programs designed to take advantage of emerging labor markets.

The BSP said the March inflow was the highest level ever recorded since the central bank started monitoring remittances by Filipinos working overseas, breaking the previous monthly record high of $1.45 billion in June 2008.–Des Ferriols, Philippine Star