By Luz Wendy T. Noble, Reporter
CASH REMITTANCES are expected to decline this year, as Filipinos living and working abroad face massive layoffs due to the coronavirus-led global economic slowdown.
“Considering that there are already OFWs being repatriated particularly from the sea-based sector, we see that there will be some contraction in remittances by about 0.2 to 0.8 percentage point,” Bangko Sentral ng Pilipinas (BSP) Assistant Governor Iluminada T. Sicat said in an online briefing on Friday.
This estimate is much lower than the already downgraded 2% growth outlook given by BSP Governor Benjamin E. Diokno earlier this month, as well as the baseline 3% growth forecast for cash remittances before the outbreak started.
Cash remittances, which fuel domestic consumption, grew by 4.1% to reach a record $30.133 billion in 2019.
In January, cash remittances rose 6.6% to $2.648 billion, from the $2.484 billion a year ago.
“We believe remittances could also be affected by emerging scenario to the extent that the pandemic problem continues…,” Ms. Sicat said.
World Bank projected remittance flows to lower and middle income countries may drop by 13% to $128 billion this year, amid a drop in wages and employment of migrant workers in host nations due to COVID-19.
In a note sent to reporters on Friday, Nomura Global Research said that the Philippines is likely to suffer the most among remittance markets.
“The Philippines looks the most vulnerable with remittance inflows accounting for 9.9% of GDP in 2019, followed by India (2.8%),” the report said.
Historically, remittances had withstood previous economic crises and has continued to record growth despite challenging situations.
“For the Philippines, this is consistent with our view that remittances are unlikely to be as resilient as in the past given the slump in host countries and sea-based workers facing layoffs particularly on cruise ships,” it said.
A recent study from the Ateneo de Manila University projects that about 300,000 to 400,000 OFWs may experience pay cuts or repatriation as the COVID-19 pandemic hurts many sectors worldwide.
The Department of Foreign Affairs (DFA) has repatriated a total of 19,048 Filipinos since the first repatriation flight from Wuhan, China last Feb. 9, according to DFA Assistant Secretary Eduardo Martin Meñez. The majority of these are repatriated OFWs are seafarers.
Analysts have flagged that a drop in remittances could have a spillover effect on consumption. Consumption is a key segment of the economy, accounting 70% of its gross domestic product.
The Philippines is the world’s fourth largest remittance recipient in 2018, according to World Bank data. It lags India, China, and Mexico.