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CONTRARY to the Bangko Sentral ng Pilipinas’ (BSP) forecast,
remittances from overseas Filipino workers (OFWs) will post flat
growth this year due to the weak global economy, according to JP
Morgan.
“We expect remittances to see flat growth in
2009 on the back of the very weak global economic backdrop.
Nonetheless, we do not expect remittances to contract due to
diversified base of overseas workers that are increasingly employed
in service/professional industries,” the US investment bank said
in its latest report.
JP Morgan said about 65 percent of OFW deployed
in the past decade were in service or professional industries that
are less economically sensitive and so more resilient with the
global downturn.
The BSP projected remittances to grow by 6
percent to 9 percent this year from an estimated $16.3 billion in
2008.
Remittances rose by 15.5 percent year-on-year to
$13.707 billion in the first 10 months last year compared with
$11.866 billion in the same period in 2007. The BSP had said
remittances would be sustained at a monthly level of $1 billion.
Remittances account for more than 10 percent of
the economy, as measured by the country’s gross domestic product
(GDP). OFW money sent home also has been an important driver for
both external financing and consumer spending.
There are about 8.7million OFW in more than 200
countries, with the bulk of remittances emanating from the US, where
Filipinos make up 32 percent of the total number.
However, the vast majority of OFW have permanent
status in the US, Canada, Saudi Arabia, United Arab Emirates and
Canada, allowing them better flexibility to look for permanent jobs
in case of retrenchment.
At end-October, the major sources of remittances
were the US, Saudi Arabia, Canada, the United Kingdom, Italy, United
Arab Emirates, Japan, Singapore and Hong Kong.
Fitch Ratings Inc. had said the Philippines’
foreign reserves would decline this year due to slower remittance
flows. In a statement, Fitch said gross international reserves would
stay below last year’s $37.1 billion.
-- Maricel E. Burgonio
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