Falling Remittances Foretell Gloomier Consumption, Growth

Remittance from overseas Filipinos continued to slow in with year-on-year growth of just 2.2% in April which is down from 3.1% in March and 4.9% in February, according to newly-released data from the Bangko Sentral ng Pilipinas (BSP). According to research group IBON, this foretells further depressed consumption and growth in the economy, as well as deteriorating welfare for millions of remittance-dependent households around the country.

The deepening global crisis has actually already caused overseas remittances in the first quarter of 2009 to fall in 11 out of the 20 countries which account for 96% of overseas remittances back to the Philippines. Remittance growth in another four countries, meanwhile already slowing and could also soon turn negative.

According to data from the Bangko Sentral ng Pilipinas (BSP), the largest decrease was in remittances from the United States (US) which shrank 9.1% in the first quarter of 2009 compared to the same period last year. The US$1.68 billion in remittances from the US in the January-March 2009 period was US$168.3 million less than the US$1.84 billion remitted in January-March 2008. In 2008, Filipinos in the US accounted for 48% of remittances back to the country.

The government in recent months has tried to play up how the number of Filipino migrant workers is continuing to expand and how it is able to find alternate work for displaced workers. If this is true, the falling remittances however imply that their average earnings are dropping with correspondingly less income on a per household basis.

The depressed consumption and economic growth is not just because migrant workers and their families are saving but also because remittances are dropping to begin with, IBON stressed.

Also shrinking were remittances from the United Kingdom (13.8% fall), Italy (23.2%), United Arab Emirates (6.5%), Hong Kong (15.9%), Taiwan (37.5%), Bahrain (11.2%), Kuwait (58.6%), Qatar (4.9%), South Korea (22.8%) and Spain (1.6%). The 11 countries in total remitted US$335.3 million less in the first quarter of 2009 compared to the same period last year.

Remittances from Saudi Arabia, Canada, Singapore and Australia were still growing but at slower rates compared to previous years. Only five countries– Japan, Germany, Norway, Greece and Malaysia– recorded faster growth rates in remittances in the first quarter. These however barely compensated for the falling remittances in the other countries, and growth in overall remittances slowed to just 2.7% in the first quarter of 2009 from 13.2% growth in the same period last year and 24% in 2007.

These top 20 remittance-sending countries together accounted for US$3.85 billion in remittances or 96% of the US$4.06 billion total in the first quarter of 2009. The shrinking or slowing remittances across so many countries underscores the global nature of the turmoil and how overseas Filipinos are not immune or “recession-proof”. As it is, remittances by Filipinos from 67 countries have shrunk with those from dozens more countries already slowing.

These are all indications that the country’s cheap labor export policy may be reaching its limits in the face of global migration trends in the last years and the global turmoil since last year. More than ever, economic policies have to be geared towards creating domestic jobs through real agrarian reform, agricultural development and building Filipino industry. (end)

IBON Foundation, Inc. is an independent development institution established in 1978 that provides research, education, publications, information work and advocacy support on socioeconomic issues.

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