Wednesday, 15 July 2009

Philippine central bank expects slight growth in May remittances

Michelle Remo
Philippine Daily Inquirer
http://business.inquirer.net/money/topstories/view/20090714-215482/BSP-expects-slight-growth-in-May-remittances

MANILA, Philippines—Despite the global downturn, remittances to the Philippines may have slightly grown in May as Filipinos remain the top labor-resource choice abroad.

Amando Tetangco Jr., governor of the Bangko Sentral ng Pilipinas, said remittances in May likely grew between 2 and 3 percent from the $1.4 billion registered in the same month last year.

Thousands of overseas Filipino workers have been laid off, following the collapse of the US financial sector that fueled the economic downturn. But labor officials earlier said the number of Filipinos newly deployed abroad more than offset the OFWs that had been sent home. Deployment, they said, remained at a double-digit level.

Job cuts were high in the financial and manufacturing sectors, they said. But other sectors, such as health care and education, continued to increase demand for labor.

Tetangco said the rise in deployment and the start of the school year, which forced many OFWs to send tuition money to their families, helped fuel remittance growth in May.

The projected growth of remittances in May could bring the average increase for the first five months of the year to between 2.5 and 2.7 percent from the $6.8 billion posted in the same period last year.

If the projections held true, overall remittances could exceed the government’s official forecast of zero-growth this year.

Tetangco said flat growth in remittances was actually a conservative estimate, noting that the gradually stabilizing economy could help also increase deployment of Filipinos abroad.

“If what we are seeing in the global economy continues, specifically the signs that contractions in the advanced economies are slowing down, then this could eventually lead to higher remittances,” Tetangco told reporters on Tuesday.

Last year, remittances grew a hefty 13 percent to $16.4 billion.

Some analysts said remittances would likely contract this year because advanced economies were in the grip of recession. They said that the United States was still the top source of remittances sent to the Philippines.

But the BSP said a contraction was unlikely. Tetangco said the BSP maintained its forecast that remittances would reach $16.4 billion this year, translating to zero growth from that of last year. But he also said the BSP would review the forecast.

Tetangco said a slowdown in the growth of remittances was expected because of the crisis. But if remittances were to be maintained at the same level as that of last year, the money sent in could help support growth in consumption and the overall economy.

The government expects the economy to grow between 0.8 and 1.8 percent this year.

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