Slowing remittance growth from Filipino workers cause for concern
Slowing growth of remittances sent by Overseas Filipino Workers (OFWs) to their home country have alerted economists that there might be a sustained weakness in these important cash transfers as long as low oil prices are impacting employment prospects and wage growth for migrant workers, especially in the Gulf states.
According to the Philippine’s central bank, in the first two months of 2015, remittances were up by just 2.4 per cent, which is one of the weakest growth rates for remittances in years. The growth so far is also clearly below the Philippine government’s initial forecast for annual remittance growth of 5.5 per cent in 2015, after remittances in 2014 grew 8.5 per cent over 2013 to an all-time high of $28 billion, according to World Bank figures. Remittances contributed 8.5 per cent to the country’s GDP last year and were a whopping 38 per cent of export revenue of goods and services, but this year these shares could be shrinking.
Banking group Standard Chartered said in a recent note that cash inflows from the Middle East to the Philippines could ease over a longer period in case oil prices remain at current low levels. Around a third of the entire OFW population globally, or an estimated 2.6mn people, is working in the Gulf, and the main source countries there for remittances are Saudi Arabia, United Arab Emirates, Qatar and Kuwait. Due to more cautious expenditures of Gulf governments in the wake of lower oil income and scaling down of some large projects, hiring of new Filipino workers has also slowed down in the recent past, according to local recruitment agencies.
Standard Chartered’s analysis is supported by a World Bank report released on April 16 which expects that growth in the Middle East will be flat for at least the coming two years, and the low price of oil will cut $215 billion from combined state revenue this year in the Gulf Cooperation Council countries alone, or 14 per cent of their combined GDP, which certainly will be negatively reflected in the migrant labour sector and, as a result, in remittances.
But the low oil price is not the only problem for OFWs’ earnings. According to Standard Chartered, remittances to the Philippines from Asia, especially from Singapore, Hong Kong, Taiwan and Japan, where many of the other OFWs are working, contracted for three consecutive months due to continued economic weaknesses in those countries. Growth in remittances from Europe, where most OFWs are working in the United Kingdom, as well as in Italy and other Eurozone countries, declined for eight consecutive months. Those who are getting their salaries in euros face the additional problem that the value of the European currency slumped significantly in the past few months compared to both the US dollar and the Philippine peso.
The Philippines is the third largest remittance recipient in the world, only behind India and China, which received remittances of $70 billion and $64 billion, respectively, in 2014. Mexico and Nigeria are next on the list, having received $25 billion and $21 billion, respectively, last year. Total global remittances in 2014 reached $583 billion, a 4.7-per cent growth from 2013. This year, global remittances are forecast to grow by just 0.4 per cent to $586 billion, the slowest growth rate since the global financial crisis of 2008.
Slowing growth of remittances sent by Overseas Filipino Workers (OFWs) to their home country have alerted economists that there might be a sustained weakness in these important cash transfers as long as low oil prices are impacting employment prospects and wage growth for migrant workers, especially in the Gulf states. According to the Philippine’s central bank, in the first two months of 2015, remittances were up by just 2.4 per cent, which is one of the weakest growth rates for remittances in years. The growth so far is also clearly below the Philippine government’s initial forecast for annual remittance growth...
Slowing growth of remittances sent by Overseas Filipino Workers (OFWs) to their home country have alerted economists that there might be a sustained weakness in these important cash transfers as long as low oil prices are impacting employment prospects and wage growth for migrant workers, especially in the Gulf states.
According to the Philippine’s central bank, in the first two months of 2015, remittances were up by just 2.4 per cent, which is one of the weakest growth rates for remittances in years. The growth so far is also clearly below the Philippine government’s initial forecast for annual remittance growth of 5.5 per cent in 2015, after remittances in 2014 grew 8.5 per cent over 2013 to an all-time high of $28 billion, according to World Bank figures. Remittances contributed 8.5 per cent to the country’s GDP last year and were a whopping 38 per cent of export revenue of goods and services, but this year these shares could be shrinking.
Banking group Standard Chartered said in a recent note that cash inflows from the Middle East to the Philippines could ease over a longer period in case oil prices remain at current low levels. Around a third of the entire OFW population globally, or an estimated 2.6mn people, is working in the Gulf, and the main source countries there for remittances are Saudi Arabia, United Arab Emirates, Qatar and Kuwait. Due to more cautious expenditures of Gulf governments in the wake of lower oil income and scaling down of some large projects, hiring of new Filipino workers has also slowed down in the recent past, according to local recruitment agencies.
Standard Chartered’s analysis is supported by a World Bank report released on April 16 which expects that growth in the Middle East will be flat for at least the coming two years, and the low price of oil will cut $215 billion from combined state revenue this year in the Gulf Cooperation Council countries alone, or 14 per cent of their combined GDP, which certainly will be negatively reflected in the migrant labour sector and, as a result, in remittances.
But the low oil price is not the only problem for OFWs’ earnings. According to Standard Chartered, remittances to the Philippines from Asia, especially from Singapore, Hong Kong, Taiwan and Japan, where many of the other OFWs are working, contracted for three consecutive months due to continued economic weaknesses in those countries. Growth in remittances from Europe, where most OFWs are working in the United Kingdom, as well as in Italy and other Eurozone countries, declined for eight consecutive months. Those who are getting their salaries in euros face the additional problem that the value of the European currency slumped significantly in the past few months compared to both the US dollar and the Philippine peso.
The Philippines is the third largest remittance recipient in the world, only behind India and China, which received remittances of $70 billion and $64 billion, respectively, in 2014. Mexico and Nigeria are next on the list, having received $25 billion and $21 billion, respectively, last year. Total global remittances in 2014 reached $583 billion, a 4.7-per cent growth from 2013. This year, global remittances are forecast to grow by just 0.4 per cent to $586 billion, the slowest growth rate since the global financial crisis of 2008.
