Barclays cuts OFW remittance growth forecast

MANILA, Philippines – Investment bank Barclays Capital now sees a slower growth in the amount of money sent home by Filipinos abroad this year despite the projected pick up in the second quarter of the year in light of the scheduled school opening in June.

Barclays Capital economist Prakriti Sofat said remittances from overseas Filipino workers (OFWs) would grow 6.8 percent to about $20 billion this year from a record level of $18.76 billion in 2010 despite the projected higher growth in the second quarter of the year.

“Our sense is that remittances will pick up in the second quarter ahead of school opening and we continue to expect remittances to average $20 billion in 2011 – up roughly 6.8 percent from last year,” Sofat stressed.

The latest OFW remittance growth forecast of Barclays Capital is lower than the nine percent or $20.5-billion projection set by the investment bank last February.

OFW remittances grew by 8.2 percent to a new record level of $18.76 billion last year from $17.35 billion in 2009 due to the strong demand for skilled Filipino workers as well as the expansion of overseas remittance centers. The growth rate exceeded the revised eight-percent growth forecast set by the BSP for remittances last year.

This year, the BSP lowered its OFW growth remittance forecast to seven percent or $20.1 billion instead of eight percent or $20.2 billion this year due to the political tensions in the Middle East and North African (MENA) states as well as the earthquake, tsunami, and nuclear fall out in Japan.

OFW remittances posted its slowest monthly growth in nine months in February after growing by only 6.2 percent to $1.5 billion from $1.41 billion in the same month last year.

The monthly growth recorded in February was the slowest since May last year when remittances posted a monthly growth of 6.5 percent. The growth in OFW remittances has likewise slowed down for the third straight month after posting a 10.5 percent growth in November to 8.1 percent in December, to 7.6 percent in January, and to 6.2 percent in February.

In the first two months of the year, the amount of money sent home by overseas Filipinos climbed 6.9 percent to $2.98 billion from $2.78 billion in the same period last year as remittances from sea-based Filipino workers jumped 12.7 percent while that of land-based workers grew 5.5 percent.

Filipinos in the US, Canada, Saudi Arabia, Japan, United Kingdom, United Arab Emirates, and Italy accounted for 80.2 percent of the total remittances in January and February.

In fact, the state-run Philippine Overseas Employment Administration (POEA) processed 43,360 job orders for service, production as well as professional, technical, and related workers in the first quarter of the year for deployment in Saudi Arabia, United Arab Emirates, Qatar, Kuwait, and Taiwan.

Despite the slowdown, BSP Governor Amando Tetangco Jr. said the central bank is confident that remittances would remain robust this year as monetary authorities penned an eight percent growth in the amount of money sent home by Filipinos abroad to their loved ones in the Philippines.

“Remittances are expected to remain strong, as the ongoing crises are expected to have limited impact on the overall remittance flows while other labor markets may take up the slack in overseas employment,” he stressed.

For 2012, the BSP sees OFW remittance growth further slowing down to five percent or $21.1 billion. –Lawrence Agcaoili (The Philippine Star)