BSP cuts OFW remittance growth forecast

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has slashed the projected growth in the amount of money sent home by Filipinos abroad this year and sees further slowdown next year due to the ongoing tensions in Middle East and North African (MENA) states as well as the magnitude 8.9 earthquake and killer tsunami in Japan.

BSP Deputy Governor Nestor Espenilla Jr. said in a speech delivered on behalf of BSP Governor Amando Tetangco Jr. at the economic briefing organized by the Security Bank that monetary authorities expect remittances from oversees Filipino workers (OFWs) growing by seven percent to a record level of $20.1 billion this year from $18.76 billion last year.

This was lower than the original growth target of eight percent to about $20.2 billion this year.

“Remittances in 2011 are expected to remain resilient amid possible downside risks such as the turmoil in the MENA region and natural disasters in Japan,” Espenilla stressed.

He clarified that while remittances from Japan account for 4.7 percent of the total remittances, the natural calamities in Japan may even encourage greater demand for OFWs once reconstruction efforts commence

He added that the impact on actual remittance flows could be limited if conflict in the MENA is contained to those currently affected.

For 2012, Espenilla added the monetary authorities expect OFW remittances to grow at a slower pace of five percent to about $21.1 billion.

The revised projections, according to him, were presented to the BSP’s Monetary Board last April 14.

OFW remittances posted its slowest monthly growth in nine months in February after expanding by 6.2 percent to $1.5 billion from $1.41 billion in the same month last year.

However, the monthly growth recorded in February was the slowest since May last year when remittances posted a monthly growth of 6.5 percent. The growth in OFW remittances has likewise slowed down for the third straight month after posting a 10.5 percent growth in November to 8.1 percent in December, to 7.6 percent in January, and to 6.2 percent in February.

Despite the slowdown, the BSP is confident that remittances would remain robust this year as monetary authorities penned an eight percent growth in the amount of money sent home by Filipinos abroad to their loved ones in the Philippines.

In the first two months of the year, the BSP chief said the amount of money sent home by overseas Filipinos climbed 6.9 percent to $2.98 billion from $2.78 billion in the same period last year as remittances from sea-based Filipino workers jumped 12.7 percent while that of lnd-based workers grew 5.5 percent.

Filipinos in the US, Canada, Saudi Arabia, Japan, United Kingdom, United Arab Emirates, and Italy accounted for 80.2 percent of the total remittances in January and February.

In fact, the state-run Philippine Overseas Employment Administration (POEA) processed 43,360 job orders for service, production as well as professional, technical, and related workers in the first quarter of the year for deployment in Saudi Arabia, United Arab Emirates, Qatar, Kuwait, and Taiwan.

OFW remittances went up by 8.2 percent to a new record level of $18.76 billion last year from $17.35 billion in 2009 exceeding the revised eight percent growth forecast set by the BSP for 2010. Originally, the BSP penned a six percent growth for OFW remittances last year but revised the target due to the strong demand for skilled Filipino workers abroad.