OVERSEAS Filipino workers (OFWs) remittances are likely to stagnate, and not contract, because of the global economic slowdown and the Dubai debt crisis, according to the Asian Development Bank (ADB). “For the Philippines, we do not see evidence of a dramatic plunge in workers’ remittances as a result of the current recession. The evidence suggests more of a stagnation of these flows,” the Manila-based lender said in a study titled, “The Global Crisis and the Impact on Remittances to Developing Asia.”
The study said remittances to Asia have stopped growing but are not decreasing steadily.
The lender said monthly remittances to the Philippines tend to fluctuate up and down, but the general trend seems to be positive “although not much of the recent growth in these flows is evident.”
”While for the whole of 2008 the average monthly growth rate was 14 percent, for the first eight months of 2009, the average growth rate remains at just 4 percent,” the ADB said.
Earlier, the Bangko Sentral ng Pilipinas said remittances had grown by 4.5 percent to $14.3 billion in the first 10 months of this year.
The ADB also said that the severe economic downturn in Dubai will affect migrants’ flows to Asia for the next few years.
Saudi Arabia is a key player in the flow of remittances to several Asian countries like the Philippines, the ADB said.
The Middle East provides about 15 percent of the remittance flows to the Philippines, with Saudi Arabia and the United Arab Emirates (UAE) accounting for a substantial amount.
UAE is also the sixth top source of remittances at about 7 percent of the total amount, after the US, Saudi Arabia, Canada, the United Kingdom and Italy.
The ADB said it is important for receiving countries not to impose restrictions that may hinder remittances such as taxes on these flows, mandatory remittance schemes, or fixed exchange rate policies.
”The best policy is not to interfere as these flows normalize. The fact that we have not seen a dramatic drop in these flows suggests that remittances are resilient and should recover in a few years. Receiving countries just have to make sure that they do not obstruct the adjustment process,” the lender said. –DARWIN G. AMOJELAR SENIOR REPORTER, Manila Times
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