OFW remittances largely US-based

According to the Institute for Development and Econometric Analysis, Inc. (IDEA) latest Economic Trends, a regular publication produced by IDEA, Inc., unlike in the export data, the figures on Overseas Filipino Workers (OFW) remittances clearly show that the United States (US) still has a very big impact on our economy. America is still the largest source of OFW remittances at 41.9 percent as of 2010. This share has gradually been decreasing though over the past 11 years as it was 65.2 percent in 2000. Nevertheless, the closest rival, Europe, is still a very long shot away at 17.0 percent as of 2010.

Furthermore, according to the same published report, IDEA revealed that it may be interesting to note though that while the share of OFW remittances that come from the US has been decreasing over the past 10 years, the shares of Europe and the Middle East have gradually been increasing. From 8.8 percent and 9.8 percent, respectively in 2000, they are now 17.0 percent and 15.8 percent in 2010. Asia’s share as a source of OFW remittances has been relatively stable over the years. The shares of Asia and the Middle East as sources of OFW remittances are likely to increase in the coming years though because these two regions have been largest destinations for land-based OFW deployments for the past eight years.

Per IDEA’s latest Economic Trends, OFW’s are mobile resources and this makes their remittances relatively stable. Unlike specialized machines for very specific industries that can do only a very limited number of tasks, OFWs are much more flexible. It is easier for a person to transfer to another industry or country with a rosier outlook than a specialized machine can. This means that if there is a recession in the US or in one of its industry, OFW remittances do not necessarily break down. Nevertheless, as migration and remittances are demand-driven, they are still very susceptible to changing demand and economic conditions.

Lastly, it was also revealed by IDEA researchers that as the US experienced the credit crunch and the bursting of its real estate bubble in 2009, the gross national income (GNI) of the US shrank by 2.4 percent, technically pushing the economy into recession. As for the Philippines, it did experience a commensurate economic slowdown but there are forces that tempered the slowdown; the Philippines did not go into a recession. Philippine GNI only slowed down from 7.1 percent in 2008 to 1.9 percent in 2009.

As such, strong domestic demand – both strong from the public and private segments – helped prevent the Philippines from inheriting the recession in the US. They were encouraged largely by overseas Filipino worker (OFW) remittances according to the Institute for Development and Econometric Analysis, Inc. (IDEA).

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