Remittances sent home by OFW grew 16.9 percent year-on-year in September, despite earlier fears the global financial crisis could see a decline, the central bank reported Monday.
Workers sent home $1.3 billion during the month, while the total for the first nine months of the year reached $12.3 billion, 17.1 percent more from a year ago, according to the Bangko Sentral ng Pilipinas.
Money from about eight million workers abroad—approximately 10 percent of the population—“remains a source of strength for the economy amid the challenging external environment,” central bank Governor Amando Tetangco said.
“Robust remittance flows have been shored up by strong overseas demand for Filipino skills, and the greater availability of expanded money transfer services to overseas Filipinos and their beneficiaries,” he said.
The government earlier said it expected layoffs as a result of the global financial crisis to hit Filipino workers, and ordered economic managers to draw up a contingency plan.
For years, the vast army of workers has managed to keep the Philippine economy afloat with their remittances. Last year they sent home $14.4 billion, equivalent to 10 percent of gross domestic product (GDP). GDP is the total value of all final goods and services produced in the country in a year.
Manila is projecting remittances to exceed $15 billion this year, but has said the crisis could make the figure difficult to achieve.
Preliminary data from the Philippine Overseas Employment Administration (POEA) showed that the number of Filipinos deployed abroad grew by 25.9 percent to 1.005 million compared with 798,731.
Newly hired Filipinos were mostly deployed to the Middle East —particularly Saudi Arabia, United Arab Emirates, Qatar and Kuwait— and Taiwan and Hong Kong in Asia.
The demand for Filipino workers abroad is expected to sustain and would boost remittance flows.
So far, the major sources of remittances were the US, Saudi Arabia, Canada, the United Kingdom, Italy, United Arab Emirates, Japan, Singapore and Hong Kong.
Much slower growth
A report released Monday by the UBS Investment Research of Switzerland predicted an economic growth rate for the Philippines of 1.8 percent next year—less than half of the official government target of between 4.1 percent and 4.8 percent. The Philippines will be threatened by a weak global economy and by financial stress, UBS added.
The report said the Philippines would experience negative export growth, as global trade contracts, and that imports would also decline as global trade slows down and foreign investments fall.
UBS predicted that consumption growth would be moderate, as fears about unemployment persist.
The US dollar will be strong against the Philippine peso, which will be a boon to the total value of remittances, even if the volume declines because of the global slowdown, UBS reported.
Prices to subside
On a bright note, UBS sees inflation substantially tapering off next year, when the prices of rice and other food items soften. “We expect inflation to average close to 3 percent in 2009, down from 9.4 percent in 2008.”
The UBS report gives one of the most conservative projections among banks and other experts who have released economic forecasts for the Philippines.
The Asian Development Bank said last week that the country would see a slowdown next year— but would not plunge into recession.
That statement came after members of the Makati Business Club expressed fears that the Philippines would see a recession in the early part of 2009. Technically, a recession is two consecutive quarters of economic decline.
Benjamin Diokno, a former Budget secretary and now economics professor at the University of the Philippines, said that an economic growth rate below the population growth rate may be considered recessionary.
The country’s population grows 2.3 percent every year, according to published statistics.
Another economist, who asked not to be identified, told The Manila Times that even if the country does not officially fall into a recession, the economy would suffer just the same if the population “significantly” outpaces GDP growth.
“Faster-pace population growth will just dampen an economy’s output in a year,” because a person’s share in the economy becomes less as the population continuously moves faster than the GDP, the economist explained.
Also on Monday, Finance Secretary Margarito Teves said the government is prepared for a deficit spending of up to P102 billion to cushion the impact of the slowing global economy and financial crisis. That amount is on top of the P1.4-trillion budget proposed by the Arroyo government to Congress.--AFP, Maricel E. Burgonio and Chino S. Leyco
It's good to hear that despite the global financial crisis some of the OFWs are still sending money to their families here even though some many of them lost their jobs.