Middle East tensions expected to affect overseas remittances

BANGKO Sentral ng Pilipinas Deputy Governor Diwa Guinigundo said remittances of overseas Filipino workers this year might go below the four percent targeted growth, or worse, stay flat.

This could happen, he said, if the conditions in the Middle East, particularly the plummeting oil prices and conflicts arising in the region would continue, resulting to possible retrenchment of the millions of Filipinos working in this part of the world.

Guinigundo noted that reports have been cirulating that there are some 1.5 million Filipinos in oil-exporting countries at risk of losing their jobs, although these remain unverified.

Guinigundo said OFW cash remittances in 2014 and 2015 reached $24.6 billion and $25.8 billion, respectively. This year, it is expected to grow by four percent.

“It is possible that it will be below four percent (this year) or flat,” the BSP deputy governor for monetary stability sector told reporters.

Department of Labor and Employment (Dole) Secretary Rosalinda Baldoz reported early this month that there are no massive retrenchment activities observed, although the labor agency is consistently monitoring the situation.

Data from the Philippine Overseas Labor Office (POLO) showed that there was a decrease of 1.11 percent in job orders in Saudi Arabia, or from 2,621 in December 2015 to 2,346 in January 2016. It was attributed to the Saudization policy, fiscal constraints of companies and redundancies.

Guinigundo, however, believes that this situation would somehow exempt professionals, especially those specializing in medical care, since these jobs are of social importance.

In addition, he said Filipino professionals are no longer as concentrated as they were in the Middle East before. Other countries in the West have also opened their country to more Filipino workers, making the country less dependent on remittances sourced from the unstable Middle East.

Meanwhile, the business process outsourcing industry players are confident that BPO revenues would exceed OFW remittances in the coming years, as the industry is seen to grow at a double-digit rate annually.

Guinigundo said the outsourcing industry poses a win-win situation, whether the economy is expanding or contracting.

“The BPO association in the Philippines is quite confident, because whether it’s a downside or an upside cycle in the global economy, outsourcing makes sense. When it’s down, you cut down cost. When it’s up, you become competitive and outsource your operations to other countries,” Guinigundo told reporters.

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