MANILA, Philippines - British banking giant Hong Kong and Shanghai Banking Corp. (HSBC) lowered its growth target for overseas Filipino workers’ remittances to 7.5 percent from the original 8.5 percent this year.
HSBC economist Sherman Chan said in a research note that the growth path for OFW remittances is now lower than initially projected despite the projected rebound in remittances later in the year.
“Philippine remittances for the first quarter came in well below our expectation, with growth essentially matching the pace seen during the global financial crisis in 2009. Although we still expect a rebound later in the year, particularly on the back of demand from Japan and Saudi Arabia, we now expect annual remittance growth to be around 7.5 percent instead of 8.5 percent as previously projected,” Chan said.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed that OFW remittances posted its slowest monthly growth in 19 months in March as it expanded only by 4.1 percent due to the tensions in Middle East and North African (MENA) states as well as the twin disaster in Japan.
Remittances reached $1.616 billion in March or $63 million higher than the $1.553 billion recorded in the same month last year. The monthly growth recorded in March was the slowest since August 2009 when remittances posted a monthly growth of 2.8 percent. The growth in OFW remittances slowed down for the fourth straight month after posting a 10.5 percent growth in November to 8.1 percent in December, to 7.6 percent in January, to 6.2 percent in February, and to 4.1 percent in March.
For the first quarter, the BSP said remittances climbed 5.9 percent to $4.594 billion from $4.339 billion in the same quarter last year as the amount of money sent home by sea-based Filipino workers jumped 12.1 percent while that of land-based workers grew 4.3 percent.
Filipinos in the US, Canada, Saudi Arabia, United Kingdom, Japan, Singapore, United Arab Emirates, and Italy accounted for 80 percent of the total remittances in January to March this year.
“With yet another month of notable deceleration in remittance growth, it has become increasingly difficult to refute the fact that growth of money inflows from OFWs is losing steam. A rebound in remittance growth during the second half of the year is likely, given solid demand within Asia and the continued gradual recovery of Western economies,” Chan added.
The economist pointed out that the reconstruction in Japan and the recent fiscal package in Saudi Arabia would translate into a rise in demand for OFWs.
In the first four months of the year, the state-run Philippine Overseas Employment Administration (POEA) processed 203,748 job orders. About 30 percent of the job orders are for production and related workers, service, professional, technical, and related workers in the first quarter of the year for deployment in Saudi Arabia, United Arab Emirates, Qatar, Kuwait, Taiwan, and Hong Kong.
Last month, the BSP lowered its growth forecast for OFW remittances to seven percent or $20.1 billion instead of eight percent or $20.2 billion this year and further to five percent or $21.1 billion next year due to the impact of the tensions in MENA regions and the disasters in Japan last March 11.