Latest data on overseas Filipino worker (OFW) remittances show further proof that such money flows are losing steam.
On Monday Bangko Sentral ng Pilipinas (BSP) reported that OFW remittances amounted to only $1.6 billion in March, representing a growth of only 4.1 percent as compared with the February remittances, which grew by 6.2 percent.
“The remittances growth came in at 4.1 percent in March compared with 6.2 percent in February, marking the fourth-straight month of deceleration,” HSBC economist Sherman W.K. Chan said via e-mail.
Former Budget secretary Benjamin E. Diokno also agreed that remittances are slowing down.
In a statement sent to the BusinessMirror, Diokno said growth in OFW remittances has not bounced back to precrisis levels. He even said the first-quarter OFW remittance growth was the slowest in recent years, except for 2009 at the height of the global economic crisis.
Diokno said the first-quarter OFW remittance growth rate was at 14.6 percent in 2006, 24 percent in 2007, 13.2 percent in 2008, 2.7 percent in 2009, 7 percent in 2010, and 5.9 percent in 2011.
“The BSP authorities are misreading the recent data on overseas remittances. They see the ‘robustness’ of remittances rather than the risk of a real slowdown,” Diokno said.
The BSP reported first-quarter remittances totaling $4.59 billion, representing growth averaging 5.9 percent year-on-year but down 2 percent on quarter-on-quarter basis.
“With yet another month of notable deceleration in remittance growth, it has become increasingly difficult to refute the fact that growth of money inflows from OFWs is losing steam,” Chan said.
BSP Governor Amando M. Tetangco Jr. said the $4.59 billion first-quarter remittance haul was attributable to higher cash transfers from both sea- and land-based OFWs, with their remittances expanding by 12.1 percent and 4.3 percent, respectively.
Some 80 percent of the remittances the banks reported originated from the United States, Canada, Saudi Arabia, the United Kingdom, Japan, Singapore, the United Arab Emirates and Italy.
Diokno explained that remittances may be on a slowdown because of the uncertainty caused by social unrest in some parts of the Middle East and North Africa, or the so-called Mena countries, and the string of disasters in Japan.
Tetangco, however, noted that these did not do as much damage to the remittance flows as some have feared.
“Total remittances from Japan continued to grow by 5.3 percent to $219 million as more overseas Filipino workers based in Japan reside in cities outside the areas affected by the calamities,” he said.
He acknowledged, however, this was a slowdown from the 12.2 percent Japan-originated remittance growth from a year earlier.
Filipino workers based in Bahrain, Yemen, Syria and Libya collectively sent home $40.1 million or 4.5 percent higher than a year ago and compared favorably against the 0.7-percent growth registered in the first quarter last year.
Still, Diokno cautioned that OFW families in these countries may be forced to tighten their belts in the coming months. And this, along with the appreciation of the peso, could mean that there would be a slowdown in household spending in the coming months.
“The below-normal growth in overseas remittances may mean slower household spending directly because of lower peso income made worse by the appreciating peso, and indirectly because of heightened uncertainty,” Diokno said.
Chan, meanwhile, said HSBC expects a rebound in remittance growth during the second half of the year “given solid demand within Asia and the continued global recovery of Western economies.”
Chan also said the postquake reconstruction going on in Japan and the recent fiscal package presented by the Saudi Arabia government “will translate into a rise in demand for OFWs.”
“That said, the weakness in first-quarter result means that annual remittances growth is set to come in below our initial forecast of 8.5 percent, to likely settle around 7.5 percent,” he said.
The BSP earlier said OFW remittances this year should grow by around 7 percent or $20.076 billion from only $18.763 billion.
In Photo: Overseas Filipino workers, who remitted some $1.6 billion in March, according to the central bank, continue to leave in droves at the Ninoy Aquino International Airport. (Recto Mercene)
