Remittances, exports to take a hit

THE Bangko Sentral ng Pilipinas (BSP) said the political unrest in the Middle East may dampen remittance inflows and exports.

“Right now, what we see is that the impact is perhaps on remittances and exports, because [the Middle East] is also an increasing market of our exports,” BSP Deputy Governor Diwa Guinigundo said.

He said monetary authorities are assessing the situation since the bulk of the country’s remittances come from the Middle East, particularly Saudi Arabia and the United Arab Emirates (UAE).

Data from the Philippine Overseas Employment Administration (POEA) showed that 670,000 Filipinos worked in the Middle East at end-December 2009.

The POEA data also showed that for January 2011, about 16.9 percent or 7,822 of the total approved job orders involved deployments to Saudi Arabia, Qatar, UAE, Kuwait, Taiwan and Hong Kong.

The POEA has issued an advisory suspending the processing and deployment of Filipino workers bound for Bahrain, Libya and Yemen until the political and security conditions in the said countries have normalized.

In an advisory, Carlos Cao Jr., POEA administrator, also instructed recruitment agencies deploying Filipino workers to the three countries to submit to POEA situation reports including a contingency plan of principals for their affected workers.

Remittances from Filipinos working abroad recorded the highest monthly and cumulative level in December at $1.69 billion, bringing the full-year amount to $18.763 billion.

Exports grew 33.7 percent to $51.393 billion last year from $38.436 billion in 2009.

Resilient remittances and the exports rebound allowed the Philippines to enjoy a balance of payments (BOP) surplus of $1.606 billion in January or 30.35 percent higher than the $1.232 billion in the same month in 2010.

The country’s sustained BOP surplus allowed its gross international reserves (GIR) to register a record high of $63.6 billion at end-January.

Before the current political violence erupted in the Middle East, the BSP had forecast the country’s BOP surplus to reach from $6 billion to $8 billion this year, and the GIR to end the year at $68 billion to $70 billion.

An ample GIR helps prop up the peso and temper domestic inflation.

Inflation averaged 3.5 percent last month, but the BSP has since raised its full-year forecast to 4.4 percent, or above the mid-point of its 3 to 5 percent target range, amid rising prices of food and oil in the international market.

The uprising in Libya has caused crude prices to jump to their highest point since September 2008 as oil firms shut down production.

The political instability has likewise spooked the markets and pushed investors to turn to safe havens such as government bonds and gold. –LAILANY P. GOMEZ REPORTER, Manila Times

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