The Bangko Sentral ng Pilipinas (BSP) said remittance inflows from overseas Filipinos would be significantly slower than originally expected this year, dipping below the six to nine percent projected growth.
The BSP's economic statistics director Iluminada Sicat said the slowdown would result from the downturn in major economies which would weaken the demand for labor as industries in Europe and the US brace against rapidly declining consumer spending and risk aversion.
The emerging projections indicate that the growth in remittance inflows would fall to single-digit levels for the first time since the central bank started tracking the funds sent home by overseas Filipinos.
Remittance inflow is one of the sturdiest, most dependable pillars of the country's economic growth, fueling domestic consumption which had steadily spurred economic activity that supported overall growth.
Sicat said the BSP is still reassessing the balance of payments projections which included forecasts for remittance inflows.
According to Sicat, the BSP wanted to carefully examine global developments and how the confluence of factors would impact on the country's external balance as a whole.
"The emerging scenario is that the growth in remittances may be slower than the earlier forecast of six to nine percent because of the contraction in remittances from other countries," Sicat said.
"The economic downturn in major economies particularly from Europe and the US may weaken demand for foreign labor, including Filipinos," she added.
"Nonetheless, we expect deployment growth will remain positive but at a slower pace compared to the double digit growth recorded in 2008 at 24 percent."
On the other hand, Sicat said that based on feedback from the Department of Labor and Employment (DOLE), the potential effects of the continuing global economic slowdown on deployment could be mitigated by the strong labor demand in countries such as Canada, Australia, UAE and Qatar.
Remittances, on the average, grow by 10 percent annually but the BSP's initial projection in early January placed the growth rate this year at six to nine percent compared with the 13.5-percent average in 2008.
The latest projection indicated that growth could go down to even lower than six percent, although she declined to commit to an actual growth range pending the BSP review.