Philippines pins hopes on diaspora as US protectionism threatens
STRONG DEMAND for overseas Filipino workers (OFWs) in the Middle East should keep remittances flowing and help soften a possible blow from protectionist policies in the United States, a senior central bank official said.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo said there remains strong demand for Filipino workers in the Middle East, as seen during President Rodrigo R. Duterte’s visit to three oil- rich countries earlier this month.
Steady deployment will help sustain growth in remittances — a key pillar of the Philippine economy — in the face of inwardlooking policies on immigration and employment in the United States, which has been the biggest source of inflows.
“What we got from the trip of the President in the Middle East is the continuing demand for overseas Filipino workers there. If ever there’s going to be some negative consequence of more inward- looking policies in the US, the prospects in the Middle East could provide some counterweight and that will provide additional resiliency to worker remittances, which is one of the pillars of the current account,” BSP’s Mr. Guinigundo told reporters yesterday.
President Rodrigo R. Duterte visited Saudi Arabia, Bahrain and Qatar last April 10-16 where he bagged 21 business-to-business deals worth some $925 million. The President also spent time to meet an OFW community in Riyadh, which is home to over 7,000 migrant workers.
Personal remittances — consisting of cash and in-kind transfers from OFWs to their families back home — accounted for nearly a tenth of gross domestic product in 2016 and helps drive private consumption that fuels
more than three- fifths of economic growth.
OFWs based in the United States sent home $8.931 billion in 2016, accounting for over a third of total inflows that year. The amount is bigger than the $ 7.553 billion in remittances from the entire Middle East in the same period, according to BSP data.
However, some analysts have expressed concern that remittances from the US could be affected by the “America- first” stance taken by President Donald J. Trump, who had vowed during his election campaign that he will bring jobs back home by tightening immigration policies and heavily taxing firms that outsource functions.
The recovery in world crude prices is also expected to boost hiring and wages in the Gulf region, which in turn would bode well for remittances.
Monthly remittances have hovered above the $2-billion level for over a year, with a $2.169 billion inflow tallied in February, according to latest central bank data. This brought the two-month tally to $4.338 billion, 5.9% more than the year-ago $4.095 billion.
In 2016, total remittances hit a fresh high of $26.9 billion, up by five percent from the previous year’s $25.607 billion and topping the central bank’s expectations.
As of December, the BSP expected 2017 remittances to grow by another four percent, although officials have said they will likely revise forecasts in the wake of last year’s strong inflows. New estimates will be announced next month.
The steady stream of remittances has kept the country’s current account in surplus in recent years, despite a widening gap in merchandise trade on strong imports and weak exports.