Cash remittances from Filipinos working and living abroad will take a hit from the coronavirus disease (COVID-19) pandemic, but a World Bank economist expects inflows to recover quickly once demand for skilled labor resumes.
World Bank chief economist for East Asia and the Pacific Aaditya Mattoo noted during a virtual press briefing attended by the Inquirer last week that remittances accounted for about a tenth of the Philippine economy.
“There is no doubt, unfortunately, that as economic activity everywhere contracts, Filipino expatriate workers will suffer,” Mattoo said.
Mattoo nonetheless pointed out that “some of them (overseas Filipino workers) are skilled people in jobs with steady salaries—and sometimes, remittances are kind of counter-cyclical that when countries are suffering, they have larger inflows of remittances from their expatriates who want to help out their compatriots.”
“But this is an unusual situation—it’s not a shock to the Philippines alone … This is a situation where all countries are suffering; in the Middle East right now, there is contraction also because of the precipitous decline in fuel prices. So I feel that this is a time when certainly countries dependent [on remittances like] the Philippines and the Pacific islands are likely to have that particular source of support shrink,” Mattoo said.
But moving forward, Mattoo said a rebound in the global economy when the COVID-19 pandemic goes away would benefit OFWs.
“When there is recovery, the need for the kind of skills—a quarter of all sailors in the world are Filipinos; a large number of nurses all over the world are Filipinos; there are skilled IT professionals all over the world—I think the demand for these skills will revive,” Mattoo said.
Last year, overseas Filipinos sent back home a record $33.5 billion in personal remittances.
Remittances were the country’s top source of foreign exchange income, which insulates the local economy from external shocks by ensuring steady supply of dollars into the system.
These cash transfers were also a major driver for domestic consumption, hence contributing to economic growth. INQ