Source: www.asiaecon.org |
PHILIPPINE REMITTANCES AND THE GLOBAL ECONOMIC DOWNTURN
The global economic slowdown will be most felt in the Philippines in the form of significant declines remittance inflows.
The global economic slowdown will be most felt in the Philippines in the form of significant declines remittance inflows. The Banko Sentral ng Pilipinas (BSP) stated that remittance inflows in 2009 is expected to go below the 6 to 9 percent projected growth. This is significantly lower than the 15 percent growth rate of remittance inflows in 2008. This is a big concern to the Philippine economy, particularly because remittances from Overseas Filipino Workers (OFW) account for over 10 percent of GDP.
The Philippines is the third largest recipient of foreign remittances, behind India and Mexico. It has also the highest levels of remittances as measured by its ratios to population, GDP and exports.
Remittance inflows have been a significant factor in the impressive performance of the Philippine economy in recent years. In terms of domestic consumption and investment, remittances simply put money in Filipinos’ pockets for them to spend in the domestic economy. Remittances have also helped with easing the Philippines’ debt burden and taming inflation by pumping money into the country’s foreign reserves.
The decrease of remittance inflows is largely blamed on weakening demand for foreign labor around the world, which is caused by the global economic slowdown in major economies and industries in Europe and the US.
To help mitigate the slowdown of remittances and the loss of overseas jobs for OFW’s, the Philippine government has been exploring new job markets in countries such as Australia, New Zealand and the Middle East. It is believed that these countries are relatively insulated from the global financial turmoil.
“We are creating new job markets abroad so much so that if we lose 5,000 jobs in Taiwan, there will be 50,000 jobs available in the Middle East,” Presidential Management Staff chief Cerge Remondo said. “In other words many [of the OFWs who will lose jobs] can be redeployed in other countries depending on their qualifications.”
In addition to looking for new jobs abroad, the government also plans to put money into emergency employment and livelihood activities. President Gloria Macapagal-Arroyo ordered the Department of Labor and Employment and the Overseas Workers’ Welfare Administration (OWWA) to set aside funds that can be used by OFWs for livelihood. There is also the Comprehensive Livelihood, Emergency Employment Program, which hopes to create 3 million jobs this year. Many of the jobs that would be created, would depend on infrastructure projects such as the creation of schools, roads and bridges, and irrigation systems.
OWWA is willing to give over P10,000 in grants to documented and undocumented OFWs who lost their jobs abroad because of the global recession. Those who qualify for this grant will not have to pay it back. OFWs can also borrow up to P50,000 from the P100-million Filipino Expatriate Livelihood Support Fund (FELSF) to help start small businesses in the Philippines.
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Source: www.asiaecon.org |