February 9, 2023

Filipino Guardian

Sentinels of Filipino Free Press

WB sees slower growth in PHL remittances in 2023

Passengers wait in Terminal 3 at Ninoy Aquino International Airport in Pasay City on October 29. Remittance growth is expected to slow next year amid signs of a global economic slowdown. — FILIPINO STAR/ MIGUEL DE GUZMAN

By Keisha B. Ta-asan, reporter

Remittance inflows to the Philippines are expected to rise 3.6% this year, the World Bank (WB) said, but sees growth slowing in 2023 as a looming global economic slowdown is likely to affect the ability of Filipino workers abroad (OFWs ) affect will send more money home.

On the other hand, Bangkok Sentral ng Pilipinas Governor Felipe M. Medalla said he expects SAW remittances “to be 4% to 5% higher in 2022 than last year.”

In the World Bank’s latest Migration and Development Letter, the multilateral lender said remittance inflows to the Philippines are expected to grow 3.6% to $38 billion this year.

The World Bank and GNP growth forecasts are slower than the 5.1% annual expansion in 2021.

“(Growth in remittances) reflected the benefits of bilateral agreements recently struck by the Philippine government with target governments (including Saudi Arabia) to improve the treatment of Filipino workers,” the World Bank said.

The Philippines lifted the ban on sending SAWs to Saudi Arabia in November. The ban was imposed in 2021 following reports of alleged mistreatment of OFWs by Saudi employers.

The World Bank also said demand for skilled Filipino workers in the healthcare and hospitality sectors also boosted remittances.

“With nearly 40-60% of their emigrants employed in the United States and United Kingdom, the Philippines and Vietnam benefited from wage increases and labor shortages in those countries even as pandemic-related stimulus subsidies expire and record-high inflation undermined them their remittance ability,” it said.

According to the World Bank, remittances to low- and middle-income countries grew an estimated 5% this year to $626 billion, slower than the 10.2% increase in 2021.

This year, the Philippines is expected to be the fourth largest recipient of remittances, after India ($100 billion), Mexico ($60 billion) and China ($51 billion).

India is the first country on track to receive more than $100 billion in annual remittances, the World Bank said.

Remittances to East Asia are projected to have risen 0.7% to $134 billion in 2022, reversing the decline of the past two years. Ex-China, remittances to the region are expected to have increased by 3.7%.

“Migrants help ease strained labor markets in host countries while supporting their families through remittances. Inclusive social protection measures have helped workers weather the income and employment insecurity caused by the COVID-19 (coronavirus disease 2019) pandemic. Such policies have a global impact through remittances and must continue,” Michal Rutkowski, the World Bank’s global director for social protection and jobs, said in a statement.

The World Bank said remittances could grow at a slower pace of 2% to $639 billion in 2023 as a global slowdown could hurt migrant wage growth in receiving countries.

“The downside risks, including a further worsening of the war in Ukraine, volatile oil prices and exchange rates, and a deeper than expected downturn in key high-income countries, are significant,” she added.

The World Bank expects remittance inflow growth to the Philippines to slow to 2% to $39 billion by 2023.

An economic slowdown and a cost-of-living crisis in migrants’ destination countries are likely to affect remittance flows to East Asia, including the Philippines.

“Real GDP growth in high-income countries is projected to halve to 1.1% from 2.4%, while inflation remains elevated at 4.4%. This will limit East Asian migrants’ ability to remittance, especially if there are job losses,” it said.

The World Bank noted that lower oil prices could dampen growth in remittances from Middle Eastern countries to East Asian countries. Slower demand for East Asian exports “is expected to depress remittance flows to lower-income East Asian countries,” she added.

Higher-income East Asian countries like China, Malaysia and Thailand that export manufactured goods tend to employ migrants from lower-income countries like the Philippines.

“When global demand for manufactured products collapses and migrants lose their jobs, remittance flows to lower-income countries are negatively impacted. The combined impact of these factors suggests that East Asia remittance growth will be marginally negative (-1%) in 2023, with total inflows totaling US$133 billion,” the World Bank said.

Excluding China, remittances to East Asia are likely to grow “sluggishly,” or 0.8%, from $82.9 billion in 2022 to $84 billion, the World Bank said.