World Bank cites RP bucking remittance downtrend

MANILA, Philippines - Against the backdrop of a global economy weakened by recession, remittance inflows to developing countries are seen to drop six percent in 2009, a recent World Bank study said.

In a report titled Migration and Remittance Trends 2009-2011, World Bank lead economist Dilip Ratha said from $338 billion last year, the amount of remittances sent by migrant workers to their families in developing countries will likely decline to $317 billion this year, reflecting the general slowdown in major economies – the workers’ host countries.

“Migrants are not returning even though the job market has been weak in many destination countries; instead they are staying on longer and trying to send money home by cutting living costs,” he noted.

But the same study pointed out that the Philippines, along with Bangladesh and Pakistan, will go against the trend as remittances to these destinations will post moderate growth.

In the first eight months of 2009, remittances from overseas Filipinos coursed through banks registered a year-on-year growth of 3.7 percent to $11.3 billion. The Bangko Sentral ng Pilipinas said remittance flows were supported by the steady deployment of Filipino workers abroad, combined with the increased access of overseas Filipinos and their beneficiaries to formal remittance channels through the establishment of more remittance centers and tie-ups abroad.

The major sources of remittances were the US, Canada, Saudi Arabia, UK, Japan, Singapore, United Arab Emirates, Italy and Germany.

The World Bank economist said remittances are still higher than official development assistance (ODA) of over $75 billion, and practically at the same level as private debt and portfolio equity.

Ratha said that new migration flows are lower due to the worldwide economic crisis, but are still positive. “We maintain our expectation of a recovery in migration and remittance flows in 2010 and 2011, but the recovery is likely to be shallow,” he said.

The report said remittances, an important source of development financing in many developing countries, are highest in East Asia and the Pacific at $84.8 billion this year, from $86.1 billion in 2008.

Europe and Central Asia will likely remit $49.3 billion this year from $57.8 billion in 2008; Latin America and Caribbean will account for $58.5 billion from $64.7 billion; Middle East and North Africa, $32.2 billion from $34.7 billion; South Asia, $72 billion from $73.3 billion; and Sub-Saharan Africa, $20.5 billion from $21.1 billion.

By countries, India will lead with $52 billion worth of remittances, followed by China with $49 billion and Mexico, with $26 billion.

The Philippines expects $19 billion worth of remittances, followed by Poland ($11 billion), Nigeria ($10 billion), Romania ($9 billion), Bangladesh ($9 billion), Egypt ($9 billion), and Vietnam ($7 billion).

Ratha warned, however, of risks that could threaten an early recovery in remittances.

“The global crisis could last longer and deeper than expected, weak job markets in the destination countries may lead to further tightening of immigration controls, while the currency movements remain highly unpredictable,” he said in the report.