World bank: OFW remittances to reach $24 billion this year

Published on Wednesday, 21 November 2012 21:24

Written by InterAksyon.com

The World Bank said on Wednesday money sent home by overseas Filipino workers (OFWs) could reach $24 billion this year, making the Philippines the world’s third-largest recipient of remittances.

The lender’s forecast is higher than the Bangko Sentral ng Pilipinas’s (BSP) estimate of $21.5 billion for the entire 2012.

The BSP last week reported that remittances rose 6 percent year-on-year to $2 billion in September, with transfers hitting $17.3 billion at the close of the first nine months of the year.

(The potential for $24 billion worth of worker remittances by the end of the year translates to $33.6 billion on the basis of estimates by the Asian Bankers Association that remittances are generally 40 percent understated.)

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 Remittances, which account for 10 percent of the Philippine economy, have helped fuel consumer spending, which comprised over three-fourths of the country’s gross domestic product, and lifted growth to a better-than-expected 6.1 percent in the first half of this year.

In its latest Migration and Development Brief, the World Bank said India would be the world’s biggest recipient of remittances, which are seen hitting $70 billion this year, followed by China with $66 billion. The Philippines would tie with Mexico with inflows estimated to reach $24 billion.

For next year, the World Bank forecast remittances to developing countries growing 7.9 percent. Growth would pick up to 10.1 percent in 2014 and to 10.7 percent in 2015.

Despite the growth in remittance flows to developing countries, the continuing global economic crisis is dampening remittance flows to some regions, with Europe and Central Asia and Sub-Saharan Africa adversely affected, while South Asia and the Middle East and North Africa expected to fare better than previously estimated, the lender said.

“Although migrant workers are, to a large extent, adversely affected by the slow growth in the global economy, remittance volumes have remained remarkably resilient, providing a vital lifeline to not only poor families but a steady and reliable source of foreign currency in many poor recipient countries,” Hans Timmer, director of the bank’s Development Prospects Group said.

The World Bank expects continued growth in remittance flows to all regions of the world, although persistent unemployment in Europe and hardening attitudes toward migrant workers in some places present serious downside risks.

Worldwide remittances, including those to high-income countries, are expected to total $534 billion in 2012, and projected to grow to $685 billion in 2015.

The World Bank said the high cost of sending money remains an obstacle to remittance growth, citing the 7.5 percent average for the top 20 bilateral remittance corridors in the third quarter and the 9 percent for all countries where data is available.

The lender said the promise of mobile remittances has yet to be fulfilled, despite the skyrocketing use of mobile phones throughout the developing world.

“Mobile remittances fall in the regulatory void between financial and telecom regulations, with many central banks prohibiting non-bank entities to conduct financial services. Central banks and telecommunication authorities, thus, need to come together to craft rules relating to mobile remittances,” the bank said.

(InterAksyon.com)