'Slow remittances foretell depressed growth'

abs-cbnNEWS.com | 06/17/2009 5:01 PM

MANILA - The slowing pace of remittances to the Philippines paints a gloomy picture of the economy, research group Ibon Foundation said Wednesday.

The growth of remittance inflows decelerated to 2.2 percent in April from 3 percent in March and 4.9 percent in February. According to Ibon, these dismal figures foretell depressed consumption and economic growth as well as further deterioration in the welfare of millions of remittance-dependent households in the country.

"The depressed consumption and economic growth is not just because migrant workers and their families are saving but also because remittances are dropping to begin with," Ibon said in a statement.

Businessmen watch the pace of remittance growth for their own company and investment strategies. So far, local companies that benefit from remittance-led consumption have disclosed lower or flat sales to the stock market.

Property companies, for example, have been experiencing slower sales in residential houses, which, in the past, have been one of the preferred investment outlets of overseas Filipino workers (OFWs).

Mobile phone companies have seen declines in the text messages sent by their subscribers while malls have experienced lower revenues from movies and other recreational activities since the start of the year.

Ibon said the government can no longer depend solely on money sent home by OFWs to sustain the declining economy. The group urged the government to reverse its policies on economic liberalization, which it said further weakened the capacity of the economy to withstand the impact of the global crisis.

"These are all indications that the country's cheap labor export policy may be reaching its limits in the face of global migration trends in the last years and the global turmoil since last year," Ibon said.

"The government in recent months has tried to play up how the number of Filipino migrant workers is continuing to expand and how it is able to find alternate work for displaced workers. If this is true, the falling remittances however imply that their average earnings are dropping with correspondingly less income on a per household basis," the group added.

The Philippines' gross domestic product--the measure of the country's economic performance--barely expanded in the first quarter at 0.4 percent from 2.9 percent in the same period last year.

The growth was much lower than the government's 1.8 to 2.8 percent projection for the three-month period, and was considered the worst since the final quarter of 1998, the year of the Asian financial crisis.

As a result, the government downscaled its 2009 growth forecast to a range of 0.8 to 1.8 percent from its previous 3.1 to 4.1 percent target.

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