OFW remittances to grow by 8 percent

Money sent home by overseas Filipino workers (OFWs) is likely to grow by 7.8 percent this year, according to a new World Bank report.

In its “Migration and Remittances Factbook 2011,” the Washington-based lender said that OFW remittances will reach $21.31 billion this year from P19.77 billion last year.

The World Bank’s projection is within the Bangko Sentral ng Pilipinas forecast of 8 percent this year.

In the latest estimates for this year, the lender said that India, China, Mexico and Philippines retain their position as the top recipients of migrant dollar remittances.

Other large recipients among developing countries include Bangladesh and Nigeria.

“The diversified destinations of Filipino [and Chinese] migrants contributed to steady growth in remittances in 2010 despite the crisis,” the lender said.

With a recovery in global demand, the World Bank added that remittance flows to the East Asia at 7.2 percent in 2011 and to the Pacific at 8.5 percent in 2012, with the flows to the two regions reaching $106 billion in 2012.

It said that after recovering by the end of this year, recorded remittances to developing countries will rise further in 2011 and 2012, possibly exceeding $370 billion in two years.

“Remittances are a vital source of financial support that directly increases the income of migrants’ families,” Hans Timmer, the director of development prospects at the World Bank, said.

Timmer added that remittances lead to more investments in health, education and small business.

“With better tracking of migration and remittance trends, policy makers can make informed decisions to protect and leverage this massive capital inflow which is triple the size of official aid flows,” he said.

Dilip Ratha, the manager of the migration and remittance unit at the World Bank, said that remittances in 2008 and 2009 became even more of a lifeline to poor countries, given the massive decline in private capital flows sparked by the crisis.

“However, high unemployment is prompting many migrant-receiving countries to tighten immigration quotas, which would probably slow the growth of remittance flows. Also uncertain currency movements can have unpredictable effects on remittance flows,” Ratha added.
In addition to crisis-related risks, there are major structural and regulatory changes in the global remittance market

Regulations to combat financial crime have become a roadblock to the adoption of new mobile money transfer technologies for cross-border remittances.

“There is urgent need to reassess regulations for remittances through mobile phones and mitigate the operational risks,” Ratha said.

According to the World Bank report, the top migrant destination country is the United States, followed by Russia, Germany, Saudi Arabia and Canada.

The top remittance-sending countries in 2009 were the United States, Saudi Arabia, Switzerland, Russia and Germany.

The World Bank said that its outlook for remittance flows, however, is subject to the risks of a fragile global economic recovery, volatile currency and commodity price movements, and rising anti-immigration sentiment in many destination countries.

From a medium-term view, three major trends are apparent: a high level of unemployment in the migrant-receiving countries has prompted restrictions on new immigration; the application of mobile phone technology for domestic remittances has failed to spread to cross-border remittances; and developing countries are becoming more aware of the potential for leveraging remittances and diaspora wealth for raising development finance. –Darwin G. Amojelar Senior Reporter, Manial Times