RemittancesGateway.org

World Bank says sees Philippine 09 remittances off 4 pct

Thursday, 07 May 2009 15:05

MANILA, May 6 (Reuters) - Remittances from Filipinos working overseas, a key driver of the Philippine economy, are expected to fall 4 percent this year due to the global downturn, the World Bank said on Wednesday.

'Significant uncertainty and downside surrounds this projection as no historical precedent exists in the history of the Philippine OFWs (overseas Filipino workers) where all host countries are simultaneously in a severe economic downturn, asset prices are all depressed, and all labour markets are deteriorating fast,' the World Bank said. A decline in remittances -- which boost consumer spending -- from last year's $16.4 billion would weigh on the Southeast Asian economy which the World Bank expects to grow by just 1.9 percent in 2009, less than half of the government's most optimistic forecast.

The World Bank's view compares with the estimate of most economists that cash sent home by Filipino workers abroad will drop 6 percent this year, the sharpest fall in nine years, according to a Reuters poll in March.

'With both the weakening of the labour market and the slowdown in remittances lagging economic activity, GDP growth is projected to weaken throughout 2009 and gradually recover in 2010,' the multilateral institution said in its quarterly economic update for the Philippines.

The government has forecast the economy to grow 3.1-4.1 percent this year, slower than the 4.6 percent expansion in 2008.

With a slower economy, the World Bank warned the state may overshoot its fiscal deficit target of 199.2 billion pesos ($4.2 billion), or 2.5 percent of GDP, if revenue collection fails to keep pace with increased spending.

The bank said that 'given the large degree of uncertainty regarding the timing of the rebound of the economy, significant uncertainty surrounds the budgeted deficit of 2.5 percent of GDP for 2009'.