OFW remittance growth may continue slide next year — ADB

The growth in money sent home by Filipino workers abroad may slow next year as Asia continues to reel from the slowing global economy, the Asian Development Bank said in a recent study. In a working paper titled The Global Crisis and the Impact of Remittances on Developing Asia, the ADB noted that despite slower remittance growth for by the region, a recovery in inflows would be "relatively quick." "All in all, rather than an epidemic of remittance decreases for countries in the region, we are faced with a decrease in the growth rate of remittances for the region that should last a few years," the lender said. This, however, assumes that the crisis will not turn unexpectedly worse and last longer than expected. "If that unexpected turn of events materializes, then we may see a further decline in remittances," it added. The ADB noted that while dollar remittances have continued to increase this year, growth has been slower than last year. Latest central bank data showed that money sent home by Filipinos working abroad rose to a monthly record of $1.5 billion in October, buoyed by the seasonal pick-up in remittances that paid for beneficiaries’ tuition in the second semester. October’s 6.7 percent growth in dollar remittances brought the 10-month level to $14.3 billion, a yearly growth of 4.5 percent. In contrast, dollar remittances for the 10-month period last year posted double-digit growth of 15.5 percent from the year earlier. "Hence, for the Philippines, we do not see evidence of a dramatic plunge in workers’ remittances as a result of the current recession. The evidence suggests more of a stagnation of these flows," the ADB said. Remittances to the Philippines, the third-largest receiver among countries in Asia after India and China, make up as much as a tenth of the country's economic output. The ADB forecast contradicts projections by London-based think-tank Capital Economics Ltd., which said money sent home by Filipinos abroad could rise by 7-9 percent next year as the world recovers from the economic slump. The ADB said the profile of Filipinos working and living overseas have changed. Traditionally, it said, the Philippines had sent out low-skilled workers but now, a larger share of migrants comes from the high-skilled sector. Gender composition of Filipino migrants has also changed. Before, males made up the majority, but with increasing demand for nurses, the share of female migrants has increased significantly. North America remains the top source of remittances to the Philippines, accounting for more than half. Europe, particularly Britain and Germany, contributes 16 percent each, followed by Middle East with 15 percent. More than a tenth of the foreign exchange comes from other Asian countries, particularly Japan, Hong Kong, Taiwan and Singapore. The ADB it is important for countries like the Philippines to stop restricting their flows, such as through taxes or mandatory remittance schemes. "Remittance flows can be made easier by improving the official channels and developing the domestic financial sector," the bank said. This, it added, requires better quality, availability and access to financial services by both senders and recipients to improve their financial literacy. The country should also develop financial products such as deposits and savings accounts, consumer loans, mortgages, insurance, pension, and helping people participate in short-term bond schemes, the ADB study said. — Cheryl M. Arcibal, GMANews.TV