OFWs TO CONTINUE REMITTANCES DESPITE SLOWDOWN IN U.S. ECONOMY - REPORT
MANILA, AUGUST 21, 2007 (STAR) By Iris C. Gonzales - Overseas Filipino workers (OFWs) will continue to send remittances back home despite a slowdown in the United States economy, the Union Bank of Switzerland (UBS) said in its latest report on the Philippines.
The investment bank also said that OFW remittances would continue to prop up the Philippine economy and support its balance of payments (BOP) or the country’s transactions with the rest of the world.
UBS said one reason remittance inflows would continue is that some of the remittance flows represent income to support essential consumption such as education or essential investments said in the in the family home.
“A separate but important side issue is that some of the rise in remittances may be explained by banks’ increasingly successful intermediation of the flow of remittances by offering cheaper and more efficient remittance services,” UBS said.
UBS said the stream of remittances is not likely to be disrupted in the long run by a slowdown in the global economy. It said that although income from OFWs represents an important linkage with the rest of the world, it would continue to support the peso and the country’s payments position.
It noted, for instance, that Filipino workers in the US are increasingly employed in more permanent higher paying and less risky jobs and that OFWs have good reasons particularly their families to keep up payments.
“Additionally, financial innovations that may have lifted the flow of remittances are not likely to be reversed. This combined with the likelihood that remittances grow in line with the global economy rather than being tied to any one region’s fortunes implies support for the Philippines balance of payments along with Philippines domestic consumption and investment. These characteristics of relative stability and diversification mean that OFW remittance flows should be seen as a positive rather than a risk factor for the Philippines’ financial prospects in the current turbulent financial market environment. “
The government has been coming up with investment projects for OFWs to help them park their earnings in worthy long-term investments so that they would be able to save their money.
OFWs and their families have expressed alarm over the steady rise of the peso against the greenback, as this diminishes the value of their dollar earnings.
There are at least eight million Filipinos abroad working as domestic helpers, seamen, medical professionals, teachers, accountants and engineers, among other professions.
Chief News Editor: Sol Jose Vanzi
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