Whole-year growth prospects are further diminished by the lack of recovery in export-oriented manufacturing due to sluggish global growth and the impact of recent typhoons Ondoy and Pepeng on agriculture performance…
While government remains optimistic that remittances and Christmas spending will help pick up the economy after weak third quarter growth, research group IBON said there is no reason to be certain that the economy is going to achieve its projected full-year growth rate of as much as 1.8 percent.
According to IBON research head Sonny Africa, it is unlikely that fourth quarter remittances will be markedly higher than in previous quarters because of a supposed upsurge in Christmas-related inflows. In the last fourteen years, the fourth quarter recorded the highest overseas Filipino workers (OFW) remittances in only six years (1997, 2001, 2003, 2004, 2006 and 2007) and actually even had the lowest remittances in four years (1996, 1999, 2000 and 2002).
Whole-year growth prospects are further diminished by the lack of recovery in export-oriented manufacturing due to sluggish global growth and the impact of recent typhoons Ondoy and Pepeng on agriculture performance, Africa said.
He added that while remittances as a whole might still pick up in the fourth quarter, it could still be that individual OFW households are receiving less, where the sheer number of OFWs abroad makes up for diminishing average incomes.
Africa stressed that amid the global economic crisis, relying on overseas remittances to boost private consumption is problematic. Remittance growth has been drastically slowing and the 4.2% growth in remittances reported by the Bangko Sentral ng Pilipinas (BSP) in the first three quarters of 2009, reaching US$12.8 billion so far, is actually less than a third of the 17.1% growth rate in the same period last year and the slowest in eight years. Compensation inflows in the NIA, which reflect OFW incomes, likewise slowed to 19.3% growth in the third quarter from 22.3% growth in the same period last year.
That drastic slowdown in remittance growth is despite how the Philippine Overseas Employment Administration (POEA) reports a 40.3% growth in OFW deployments in the first quarter of 2009, to 397,626 land-based and sea-based workers, from the first quarter last year. Taken together, increasing deployments yet lagging remittance growth could indicate falling average OFW incomes and correspondingly deteriorating welfare of OFWs and their families here in the country.
The slow economic growth exposes the limits of relying on overseas remittances to fuel growth, said Africa. More importantly, it underscores the urgency to put an end to government’s policies that overly rely on unsustainable sources of growth like OFW remittances.