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||20 July 2009
US slowdown to cause sharp fall in Philippines Remittances
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Remittance flows to developing countries, including the Philippines, were expected to fall sharply this year because of the impact of the US economic and construction sector slowdown, said the Manila Times, citing a new World Bank report.
In a new report titled, “Migration and Development Brief,” the Washington-based lender said remittance flows this year were expected to decline even more sharply than projected earlier because of a deterioration in the economic and employment situation in the migrant-destination countries in the first half of this year.
Based on the revised projections by the World Bank, global economic growth was expected to contract by 2.9 percent in 2009.
Next year, global gross domestic product (GDP) growth is expected to rebound to 2 percent in 2010 and 3.2 percent by 2011. GDP, a key economic indicator, is the total cost of all goods and services produced in a country in a year.
In line with this outlook, the lender said, “We expect that remittance flows to developing countries could decline by 7 percent to 10 percent in 2009, with a possible recovery in 2010 and 2011.”
World Bank said remittance flows to developing countries were projected to contract by 7.3 percent to $304 billion from an estimate of $328 billion last year. In East Asia and Pacific, remittances were likely to fall by 5.7 percent to $74 billion this year.
The lender earlier projected that remittances flow in developing countries to contract by 5 percent this year.
The World Bank blamed the gloomy remittance projection on the US economic and construction sector slowdown, unfavorable foreign exchange rate, as well as the rising protectionism in the destination countries.
“The impact of the US economic and construction sector slowdown has been felt with a lag on remittance flows to Latin American countries,” the bank said, adding that a similar lagged response in remittance flows to South Asia and East Asia may arise from the current slowdown in economic activities in the Gulf Cooperation Council (GCC) countries.
Philippines’ National Statistics Office earlier reported that laborers or unskilled overseas Filipino workers (OFWs) were the biggest source of cash remittances, belying claims of the Bangko Sentral ng Pilipinas (BSP) that highly skilled Filipino workers were responsible for the bulk of money sent home.
The central bank had maintained that highly skilled OFWs, such as those in the health professions, were propping up remittances despite a global economic slowdown.
The National Statistics Office said laborers or unskilled workers posted the highest cash remittance of 19.5 billion peso among the different occupation groups.
The agency reported that 20.4 percent of OFWs worked in Saudi Arabia. One in every seven worked in United Arab Emirates. Singapore, Hong Kong, Japan, Qatar and Taiwan were also popular destinations of OFWs. Those who worked in Europe comprised 9.4 percent, while those in North and South America accounted for 8.4 percent.
OFWs working in Asia comprised 78.2 percent and sent the biggest cash remittance of 69.9 billion peso.
From January to May, remittances reached $6.98 billion or a 2.8-percent increase from the level recorded during the same period last year. In May alone, money sent home to the Philippines through banks grew by 3.7 percent to $1.48 billion.
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