Remittances growth seen at 0% next year

By VG Cabuag
Reporter

REMITTANCES of the overseas Filipino workers may experience a flat growth by next year as it is already reaching its peak and the deployment of OFWs is beginning to slow down, an official of the Bangko Sentral ng Pilipinas said on Monday.
Diwa Guinigundo, Bangko Sentral ng Pilipinas deputy governor, said remittances may only grow as much as 10 percent by next year to $13.6 billion.
The growth rate is the same as this year’s expected 10-percent increase to $11.8 billion.
“Global economy is poised for recovery [this year]; next year the growth is modest,” Guinigundo told
reporters.
He explained that there are signs that the deployment of workers is beginning to slow down, based on the figures of the Philippine Overseas Employment Administration.
According to government estimates, there are about eight million OFWs worldwide and the average annual deployment of workers from the Philippines is about one million.
Last year, OFW remittances, or only those captured by the formal system such as the commercial banks, grew by a sizzling 25 percent to $10.7 billion.
Latest data from the BSP showed remittances reached $866 million in February, or an annual growth of 11 percent over the same month in 2005. For the first two months of the year, dollars sent by OFWs totaled $1.8 billion from $1.6 billion last year.
“The higher level of remittances was partly attributed to commercial banks’ expansion of services,” the BSP earlier said.
A working paper of the International Monetary Fund warned the government on relying too much on remittances, as it has had an underlying effect on the economy, causing certain imbalances in the country’s productivity.
Globally, the Philippines is the third-largest recipient of dollar remittances from its nationals coursed through commercial banks, next to India and Mexico.
“While remittances increase consumption and have the ability to smooth household consumption against income shocks, they may also contribute to increased macroeconomic risk through higher business cycle volatility,” said the IMF paper titled: “Beware of Emigrants Bearing Gifts: Optimal Fiscal and Monetary Policy in the Presence of Remittances.”

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