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By Maricel E. Burgonio, Reporter
World Bank said remittances by
overseas Filipino workers (OFWs) are likely to post a modest drop
this year because of job lay offs, as it cited a larger basis for
the projected remittances that included non-cash flows.
Dilip Ratha, the banka’s lead
economist for Migration and Remittance Team, said remittances could
drop by 4 percent this year from its estimate of $18 billion in
total remittances last year. The World Bank also computed the amount
of remittances in cash and non-cash flows, including the balikbayan
box.
“We might see an increase but
not a double-digit growth—a decline of 4 percent or so,” he
explained.
Ratha spoke at International
Remittance Conference organized by the Bangko Sentral ng Pilipinas.
He added that remittances in
low-income countries would slow down sharper in low-income
countries.
For middle-income countries,
remittances are expected to drop by 4.9 percent this year.
Remittances for low-income countries would drop by 5.4 percent this
year.
Total remittances from developing
economies grew by 9 percent to $305 billion last year.
This is lower than the annual
growth of 23 percent in 2007, which posted a total amount of $281
billion.
Ratha said the sharp decline in
the US migrant employment in construction and manufacturing sectors
are switching to wholesale and retail and restaurant sector.
Philippine prediction
Meanwhile, the central bank
expect remittances, which only measures the cash flows from banks
and non-bank channels, to post a flat growth this year. Filipino
workers sent home $16.4 billion through banks last year, which
posted a growth but the remittances tapered off toward the end of
2008 when the global crisis struck.
“We still expect a flat growth
[for remittances],” central bank Governor Amando Tetangco Jr. told
reporters, adding that the World Bank used a different basis in
reporting the $18-billion remittances it recorded for last year.
Francisco Dakila, central
bank’s Center for Monetary and Financial Policy director, earlier
said that the stability of food prices would offset the impact of
declining remittances in consumption growth.
As prices of food normalizing, it
would have significant improvement in the real purchasing power of
consumer, he explained. Consumption represent 70 percent of economic
output, is considered quite healthy although there’s slight
moderation, he added.
In the consumption basket, half
of the expenditures of Filipinos consist of food spending.
The annual inflation rate for
food increased to 12.8 percent in February from 12.7 percent in
January.
The central bank expects
inflation, or annual increase of prices to reach 3.9 percent this
year and 3.7 percent next year because of lower oil prices.
From an inflation of 7.3 percent
in February, the central bank expects inflation to decline further
to 5.9 percent to 6.8 percent in March because of the drop in oil
prices and a cut in jeepney fare.
Based on the latest report,
remittances grew by 0.1 percent year-on-year to $1.265 billion in
January this year from $1.264 billion in January 2008, because of
the contraction of remittances from the United States.
The result in January was lower
than the central bank’s projection, which forecasted remittances
to exceed the 0.8 percent month-on-month growth in December. The
level in January is also below than the monthly average of $1.3
billion to $1.4 billion.
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