RP'S GROWTH DRIVER: REMITTANCES SHIELDED FROM U.S. SLOWDOWN
MANILA, OCTOBER 12, 2007 (MALAYA) BY MAX ESTAYO - The Philippines need not fret that much about workers’ remittances being affected by the slowdown in US economy, according to Hong Kong & Shanghai Banking Corp.
Remittances fuel the country’s growth. One out of 10 families rely on remittances to survive.
Fred Neumann, economist of HSBC, said that while about 48 percent of total OFW remittances comes from the US, Filipino migrant workers are spread out in North America and just channel their remittances through US banks.
"They therefore show up in the data as coming from the US even if the Filipino worker in question resides and earns the cash in another country," Neumann said.
Also, Filipino workers are "less cyclically sensitive," Neumann said, helping ensure robust remittance flows despite blips in the US economy.
"Unlike Mexican workers who have often taken on jobs in the US construction industry or similar occupations, a large number of Filipinos tend to be employed in the healthcare and education sector, rendering them less vulnerable to a cyclical downturn," he said.
Moreover, remittances are not likely to slow on decreasing deployment, the Hong Kong-based economist said, because unrecorded employment is rising.
Deployment has fallen by at least three percent in the first eight months from last year, making the government off the target of sending out at least a million workers this year, he said.
"Official data comprises only lower skilled workers," Neumann said.
"There are reasons to suspect that an increasing number of professionals are leaving the country who may seek their own arrangement when taking jobs abroad," he said.
"Therefore the falling deployment numbers do not necessarily reflect the overall growth in OFWs heading overseas," he added.
Lastly, another optimism for OFWs is demographics.
"Population trends overwhelmingly favor an outward migration from the country, with young, qualified Filipinos meeting the labor requirements in other economies with more rapidly aging populations," Neumann said.
"The country appears well placed to exploit an increasingly important trend in the global economy – the shortage of qualified workers in industrialized nations," the economist said.
Remittances comprise more than 10 percent of the country’s growth domestic product and is behind the growth in spending, which is supporting economic growth.
Total remittances are seen reaching $14.7 billion this year, the bulk or $14 billion of which are seen passing through banks.
Filipino workers sent home a total of $12.8 billion in remittances through banks last year.
Chief News Editor: Sol Jose Vanzi
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