CITI CUTS OFW INFLOW GROWTH FORECAST
MANILA, MAY 2, 2011 (STAR) By Lawrence Agcaoili - US-based investment bank Citigroup has lowered the projected growth in the amount of money sent home by Filipinos abroad to their loved ones to the Philippines to 4.8 percent this year on the back of the continued political tensions in the Middle East and North African (MENA) states as well as the magnitude 9.0 earthquake and tsunami in Japan.
Citigroup economist Jun Trinidad said the projected growth was lower than the previous forecast of 6 to 6.5 percent resulting in a reduction of about $209 million to $296 million worth of remittances.
“Wary of MENA/Japan event risks surrounding OFW remittances likely to persist for rest of the year, we reduce our growth assumption for the OFW remittance flows to 4.8 percent from the previous six percent to 6.5 percent, likely to mean foregone flows of $209 million to $296 million,” Trinidad stressed.
The Bangko Sentral ng Pilipinas (BSP) decided to lower the growth for overseas Filipino workers (OFWs) remittances to seven percent to $20.1 billion instead of eight percent to $21.1 billion this year due to the tensions in MENA states as well as the disaster in Japan.
OFW remittances went up 8.2 percent to a new record level of $18.76 billion last year from $17.35 billion in 2009, exceeding the revised eight percent growth forecast set by the BSP for 2010.
Latest data from the BSP showed that OFW remittances climbed 6.9 percent to $2.98 billion in two months from $2.78 billion in the same period last year as remittances from sea-based Filipino workers jumped 12.7 percent while that of land-based workers grew 5.5 percent.
Filipinos in the US, Canada, Saudi Arabia, Japan, United Kingdom, United Arab Emirates and Italy accounted for 80.2 percent of the total remittances in January and February.
As a result of the lower growth for OFW remittances, Trinidad said Citigroup also lowered the projected current account (CA) surplus to $6.5 billion or three percent of gross domestic product (GDP) instead of $10.1 billion or 4.6 percent of GDP this year due to the projected slowdown in the growth of exports as well as higher oil prices.
“We base our sharply lower surplus on a merchandise trade deficit deteriorating to $13.2 billion as higher oil prices are anticipated to bloat the total import bill, likely to rise by 13 percent amidst sharply lower export growth of 10 percent,” he added.
The country’s current account surplus declined 9.5 percent to $8.465 billion or 4.5 percent of GDP last year from $9.358 billion or 5.8 percent in 2009 due to higher deficit in trade in goods as the value of imports outpaced the volume of exports as well as trade in services due to higher net repayments.
In 2010, the Philippines booked a record balance of payments surplus of $14.4 billion from $6.42 billion in 2009 while its gross international reserves (GIR) reached an all-time high of $62.37 billion from $45.03 billion.
The BSP is confident that the GIR, which refers to the sum of all foreign exchange flowing into the country, would hit $70 billion while the BOP surplus would hit $6.7 billion this year.
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