Slow OFW Remittance Growth Worries Philippines
MANILA: Sluggish growth of remittances by Overseas Filipino Workers (OFWs) to their home country have made economists sit up, and take notice, fearing that there might be a sustained weakness in these important cash transfers as long as low oil prices continue to impact employment prospects, and wage growth for migrant workers, especially in the Gulf states, a media report said.
In the first two months of 2015, remittances were up by just 2.4 percent, which is one of the weakest growth rates for remittances in years, Gulf Times quoted the Philippine’s central bank as saying.
The growth so far is also clearly below the Philippine government’s initial forecast for annual remittance growth of 5.5 percent in 2015, after remittances in 2014 grew 8.5 percent over 2013 to an all-time high of $28bn, according to World Bank figures, the report said.
Remittances contributed 8.5 percent to the country’s GDP last year, and were a whopping 38 percent of export revenue of goods and services, which could clearly be shrinking this year, it added.
Around a third of the entire OFW population globally, or an estimated 2.6 million people, is working in the Gulf, and the main source countries there for remittances are Saudi Arabia, the United Arab Emirates, Qatar and Kuwait, the report pointed out.
Due to more cautious expenditures of Gulf governments in the wake of lower oil income and scaling down of some large projects, there has also been a decrease in hiring of new Filipino workers in the recent past, local recruitment agencies were quoted as saying by the news portal.
However, the low oil price is not the only problem for OFWs’ earnings. According to Standard Chartered, remittances to the Philippines from Asia, especially from Singapore, Hong Kong, Taiwan and Japan, where many of the other OFWs are working, slowed down for three consecutive months due to continued economic weaknesses in those countries, the report said.
Growth in remittances from Europe, where most OFWs are working in the United Kingdom, as well as in Italy and other Eurozone countries, declined for eight consecutive months, it added.
Those who are getting their salaries in Euros face the additional problem that the value of the European currency slumped significantly in the past few months compared to both the US dollar and the Philippine peso, the report said.
The Philippines is the third largest remittance recipient in the world, only behind India and China, which received remittances of $70bn and $64bn, respectively, in 2014, Gulf Times reported.