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THE
dollar spring could dry up. This is the message of
Standard Chartered Bank to families of workers abroad,
as well as to government and businessmen, relying on
remittances to add to their resources.
Eugene
Ellis, Stanchart chief executive officer, said Wednesday
the economic downturn in the
United States
that is spreading to other First World countries is
already resulting in loss of jobs and the shutdowns of
businesses, as well as reduced spending.
He said
in this situation, Western countries and those in the
Middle East are being forced to a change in lifestyles
and when they begin to reduce staff, the first to go
would be the migrant workers.
“Remittances, as we say, will slow. It won’t stop but it
will slow….We should not look at OFWs as the main source
of income [of their families left in the Philippines],”
said Ellis. “The US recession will prove to be
problematic to OFWs.”
On the
other hand, Ellis said Philippine consumer prices could
almost double to 5 percent overall. Inflation in all of
2007 was 2.8 percent. Last month inflation had climbed
to 6.4 percent.
He said
one result that could occur is for the peso-dollar rate
to stabilize at P43 to the dollar, and this will be to
the benefit of the families of the overseas workers.
Wednesday’s close was at P41.88.
Some
banks expect an exchange of P38 to $1 by year-end, but
he said this is quite remote now that the
US
is in virtual recession.
The
country’s gross domestic product, or the sum of all
goods and services produced in the country, will also
slow down to about 5 percent by year-end, lower than the
7.3 percent achieved last year, the highest in 31 years,
according to Ellis.
A recent
study by University of the Philippines economist Ernesto
Pernia underscored that extreme reliance on money from
Filipinos overseas has not helped reduce poverty and may
even hobble the poor’s capability to earn. Pernia used
the government’s triennial Family Income and
Expenditures Surveys (FIES) from 2003 to 2006.
“Such
inequality tends to dampen the poverty-reduction effect
of remittances—FIES reveals that poverty incidence rose
to 32.9 percent in 2006, from 30 percent in
2003....Despite their beneficial effects, remittances
cannot be relied on as a principal instrument for
reducing poverty or fostering the country’s long-run
development,” said Pernia in his paper titled
“Migration, Remittances, Poverty, and Inequality.”
Last
year Ellis said they had revenues of P5.5 billion in the
country and attained a net credit profit of P1.12
billion, slightly higher than the previous year’s P1.07
billion. |
