BSP: Remittance drop to further slash GDP

MANILA, Philippines — The projected five percent decline in overseas Filipino workers’ remittances may further slash the country’s economic output by 0.4 percent this year, according to the Bangko Sentral ng Pilipinas (BSP).

In a press conference, BSP Governor Benjamin Diokno said monetary authorities lowered their growth forecast for OFW remittances to two percent from three percent due to the coronavirus disease 2019 or COVID-19 pandemic.

With the displacement of more OFWs in host countries due to the coronavirus outbreak, Diokno said the BSP now expects remittances to contract by five percent and pull down the country’s gross domestic product (GDP).

“This is a rough computation. It will slow down the GDP by about 0.4 percent. But as you know, these numbers are subject to review again because we really don’t know the extent of the pandemic,” Diokno told reporters.

Economic managers sees the country’s GDP contracting by two to 3.4 percent this year from 6.2 percent last year due to the pandemic. The last time the Philippine economy contracted was in 1998 due to the Asian financial crisis.

The GDP contracted by 0.2 percent in the first quarter, ending 84 straight quarters of positive growth of since the three percent contraction in the fourth quarter of 1998.

Data showed OFW remittances last contracted to $6.03 billion in 2001 from $6.05 billion 2000 primarily due to the Asian financial crisis and the political controversies during the Estrada administration.

Remittances have been accelerating since 2002 with cash inflows coursed through banks rising by 4.1 percent to an all-time high of $30.13 billion last year from $28.94 billion in 2018 and personal remittances increasing by 3.9 percent to $33.47 billion from $32.21 billion.

Latest data showed cash remittances inched up by 1.4 percent to $7.4 billion in the first quarter from $7.3 billion in the same quarter last year, while personal remittances increased by 1.5 percent to $8.22 billion from $8.1 billion.

Diokno said estimates show the pandemic would displace around 200,000 to 300,000 OFWs mostly from tourism, tourism related services as well as sea-based from cruise and cargo ships.

Diokno said the BSP’s latest projection on OFW remittances assumes that there will be no inflows from countries in Europe and the US which are heavily affected by the pandemic.

He is still confident that OFWs in the medical front such as doctors and nurses

Diokno said the decline in remittances is expected to be temporary as the figure is expected to bounce back with a four percent growth in 2021 as demand for Filipino workers resumes and as coronavirus-affected host countries recover.