OFW money may drop, cutting country's growth

MANILA, Philippines - Money sent home by overseas Filipino workers (OFWs) may drop by as much as a third this year, cutting consumption demand and compromising the country’s growth goals.

Remittances may decline to $11.4 billion for 2009, Citibank said during its Asia-Pacific market analysis held on Thursday. The cited figure is approximately 30 percent lower than 2008’s $16.4 billion.

Lower remittances may compromise the country’s economic growth targets since funds from OFWs boost demand for products ranging from cellphones to condominiums.

The “global supply" of OFWs may diminish, Citi analyst Jun Trinidad said in his report.

New hires and rehires were seen to decline by anywhere from 37 to 51 percent as the crisis cuts demand for labor in foreign shores, he said, adding that OFW deployment may fall to an eight-year low.

In 2001, only 800,000 secured jobs abroad.

Currently, 8.7 million Filipinos work abroad. Besides accounting for ten percent of the Philippines’ total population, OFWs also constitute 24.2 percent of the country’s labor force, as of 2007.

Moreover, if OFW earnings are cut by 15 percent – a move that is seen to preserve jobs – remittances would plunge to as low as $11.4 billion this year.

As a result, the lack of OFW dollar inflows may increase the budget deficit to three percent of the country’s gross domestic product (GDP), an amount equal to anywhere from P229 billion to P238 billion, Trinidad said.

“Whether the government would be in the position to cut spending and prioritize fiscal deficit containment rather than growth would be the difficult policy choice to make," Trinidad said.

Moreover, Trinidad said that the “stock" of working Filipinos abroad than the flow of foreign-bound Filipino workers would determine the foregone opportunity for remittances.

“It has always been the rising stock of Filipino workers abroad that is largely responsible for the strong remittance inflows over the past years," Trinidad said. - GMANews.TV

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