Department of Labor and Employment Predict Increase in Remittances
It seems everyone wants to join the game of predicting the amount of overseas remittances. These mostly occur when Filipino go to other countries to work and then send money home to their relatives. These Filipino are referred to as Overseas Filipino Workers (OFWs).
It is an important part of the Philippine economy, making up about 10% of the Philippine GNP. A serious drop in remittances could be the blow that would send the Philippines economy into recession. The World Bank and the International Monetary Fund have both predicted a drop in overseas remittances this year. Bangko Sentral ng Pilipinas has predicted the amount of remittances from 2008 to 2009 as unchanged.
Now there is a new player in the game, the Philippine Department of Labor and Employment (DoLE) is predicting an increase of 3.6% over 2008. Even more important is that DoLE is providing numbers to give their position credibility. They say that the number of OFWs has actually gone up during the first two months of this year. I’m a little unclear though why they would only provide the first two months. One would think these numbers would be readily available to them.
The DoLE may be a super hero in the situation as they claim they had negotiated contracts with Qatar and Saudi Arabia in the middle east. The Middle East is one of the few areas of the world where growth has remained strong. With falling oil prices though, one wonders how much longer that will continue. Others have wondered how long one region could support the huge downturns in the rest of the world.
The USA, while improving in most areas, continues to show weakness in unemployment with unemployment near
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10%. However, I believe the unemployment number have or will peak in the near future. The US economy is showing multiple signs of coming out of the recession earlier than expected.
While this is good news for most of the world, its not great news for those of us that need a strong dollar to increase our spending power while living in a foreign country. New home sales are up in the USA too. That indicates money is being loaned again. With dollars following that will tend to weaken the value of the dollar and we could start to see inflationary pressures on the dollar to further weaken the dollar.
Inflation in the USA is far from imminent though. That is the danger of large spending by the Federal Government which so far, has been hard to get started. Obama has been pushing his administrators to get the funds spent. The Christian Science Monitor has a front page story just today on that very subject.
I’m no longer looking for significant increase in the dollar’s exchange rate for the Philippine Peso. Hopefully though, I’ll be wrong again and my prediction will result in the value of the dollar shooting up. Not likely but I can wish. The dollar and peso have been stable for the last couple of months with an exchange rate of P48 to 1 US Dollar.
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If you look back over the past year or so, I think you will find that I have steadfastly said that remittances would not decrease. Glad to see that my prediction is looking right!
Yes, I know you have. They fell by 25% from the USA but the middle east has so far taken up the slack. Growth in that area cannot continue.
All signs are that recession in the US is coming to an end. If that continues and I think it will, remittances will likely rebound from the US and Canada.
Its not over yet though. The DoLE really saved the day here! Well saved it for the Filipino, for expats living on a pension, not so good for us but, of course, the Philippine government is rightly trying to protect the Filipino.
Reading closely I see BSP saying things that contradict other things they say. I think the government has been trying to put a rosy picture on the situation in order to keep people spending which is a valid approach.
Consumption is down, something the Philippine government said wouldn’t happen.
The recession in the USA has not been as deep and much shorter than most expected and that changes everything.
I’m not convinced yet that the full impact has shown itself in he numbers.
Time was when $1= P 50. exchange rate & of course, the cost of movie tickets then was a quarter of what it costs now there. So I can totally imagine the buying power of the $. Its value went south but the prices of what it’s going to buy north.
Two years ago when I made the decision to come here the dollar was at P55. It will be in he P50 range again, it has been once since I’ve been the Philippines. I’ve seen it as low as P39 ouch! and as high as P50 in the last 18 months. Just crossed P50 for a couple of hours, it hasn’t closed that high since I’ve been here, at least that I observed.
Movie tickets here are still very cheap.