MANILA, Philippines — New York-based GlobalSource Partners sees remittances from overseas Filipino workers (OFWs) declining by 10 percent this year due to displacements caused by the novel coronavirus disease 2019 or COVID-19 pandemic.
“Although these earnings have continued to grow in the first two months of the year, by 4.6 percent year-on-year, and there has been increased demand for health workers, risks in general have since multiplied as seen in the tens of thousands of repatriated workers and hundreds more displaced abroad,” it said.
Among the risks cited by the think tank include the closure of borders, which makes job switches harder to do in the short-term with the prospect of a long jobless period favoring a decision to return home as well as high forecast unemployment rates.
GlobalSource also cited voluntary and involuntary reduced wages, the expected collapse of cruise tourism which employs close to 100,000 Filipino workers, and the steep fall in oil prices further harming economies in the Middle East, which account for 20 percent of total OFW remittances.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed cash remittances coursed through banks increased by 4.6 percent to $5 billion in the first two months of the year while personal remittances rose by five percent to $5.57 billion.
OFW remittances last contracted to $6.03 billion in 2001 from $6.05 billion in 2000 primarily due to the Asian financial crisis and the political controversies during the Estrada administration.
Remittances have been accelerating since 2002 with cash remittances coursed through banks rising by 4.1 percent to an all-time high of $30.13 billion last year and personal remittances increasing by 3.9 percent to $33.47 billion.
GlobalSource said the World Bank expects global remittances to decline by 20 percent this year, with remittance inflows to East Asia and the Pacific seen to decline by 13 percent.
As a result, the country’s current account (CA) deficit will widen to 1.3 percent of gross domestic product (GDP) this year and to 1.9 percent of GDP in 2021 from 0.1 percent of GDP last year.
The country’s trade deficit, on the other hand, is also expected to hit 8.1 percent of GDP in 2020 and 9.5 percent of GDP in 2021 as export earnings contract by seven and 11.8 percent, respectively, while imports are projected to grow by 9.4 percent and 13.8 percent this year and next year, respectively.
“Although we are forecasting exports to slide, imports will fall more due to the forecast decline in domestic demand and soft oil prices that slashes the country’s import bill by about half,” GlobalSource said.
Tourism receipts are also expected to drop to only a third of last year’s earnings amid travel restrictions, while the business process outsourcing sector is expected to fare better this year.