(UPDATE) Remittance growth slows further in April

By Karen Flores, abs-cbnNEWS.com

Posted at Jun 15 2009 04:52 PM | Updated as of Jun 24 2009 01:47 AM

(UPDATE) Remittance growth slows further in April 1

(UPDATE) Remittance growth slows further in April 2

MANILA - The growth of remittance inflows reached 2.2 percent in April, slightly lower than the 3-percent rise in the previous month, the Bangko Sentral ng Pilipinas (BSP) reported Monday. Still, it was higher than the flat growth of 0.1 percent in January.

Money sent home by overseas Filipino workers (OFW) dipped slightly in April to $1.441 billion after a record $1.471 billion in March, bringing the country's total remittance inflows to $5.5 billion for the first four months of the year.

The country's major sources of remittances for the four-month period were the United States, Canada, Saudi Arabia, United Kingdom, Japan, Singapore, United Arab Emirates, Italy, and Germany, the BSP said.

Citing data from the Philippine Overseas Employment Administration (POEA), the BSP attributed the steady flow of remittances to the continued deployment of OFWs, with a total of 758,412 active job orders as of end-May. Of this number, 27 percent have been processed while 63 percent are still to be filled up.

According to the BSP, bulk of the job orders was in the production, services, and professional skills categories.

"Steady remittance inflows--averaging $1.4 billion in 2008 and in January to April 2009--continued to be driven mainly by sustained demand by host countries for Filipino skills and competence. This, combined with expanded and easier access to enhanced banking services by overseas Filipinos and their beneficiaries helped sustain remittance inflows into the country," BSP Governor Amando Tetangco said.

OFWs apply for jobs either on their own or by seeking the help of recruitment agencies. These agencies deploy workers depending on job orders from various countries.

The POEA counts OFWs who are newly hired for a job and those who are re-hired for the same job in their deployment data. Newly hired OFWs usually do not send money home on their first few months, so there tends to be a lag between their deployment and remittances attributed to them.

The government continues to give assurances that jobs overseas remain available to absorb Filipinos looking for employment. Aside from hiring agreements it signed with host countries such as Canada, Qatar, Saudi Arabia, and Australia, the government said it remains focused on job generation programs to help displaced workers find alternative jobs amid the economic downturn.


Earlier, BSP said it is expecting remittances to grow this year as labor demand remains strong despite the global economic crisis. This is, however, in contrast with the International Monetary Fund's projected 7.1-percent decline.

"It's possible to see better than zero growth for remittances this year if the trend that we have seen in the first two months plus indications of sustained demand for Filipino labor continue," Tetangco told reporters last month.

Foreign businessmen have earlier touted OFW remittances as the country's main drivers for growth this year, saying that such will prevent the Philippines from slipping into recession.

In a report, the Joint Foreign Chambers of the Philippines said remittances and revenues from the IT-enabled services sector will support the continued growth of domestic consumption, allowing the country to show positive gross domestic product (GDP) growth for 2009.

"There is a chance of mild recession should global recovery be slow and remittance and service revenue flows deteriorate more than expected. But this seems unlikely," the seven-member chamber said.

However, research group Ibon Foundation said the government should not be too dependent on remittance inflows as these are not enough to sustain the declining economy.

"The drastic drop in gross domestic product growth in the first quarter of 2009, which pushes the economy to near-recession levels of 0.4 percent, indicates how overseas remittances are already failing to prop up the economy," Ibon said in a statement.

The country's GDP barely expanded in the first quarter at 0.4 percent from 2.9 percent in the same period last year. The latest figure is much lower than the government's 1.8 to 2.8 percent projection for the three-month period, and is the worst since the final quarter of 1998, during the Asian financial crisis.

As a result, the government downscaled its 2009 growth forecast to a range of 0.8 to 1.8 percent from its previous 3.1 to 4.1 percent target.