ADB sees 20.2% drop in PH remittances in 2020
MANILA, Philippines — Remittances from Filipinos abroad are expected to drop by 20..2 percent this year amid a COVID-19 pandemic-induced global recession, putting households dependent on these cash transfers at risk of falling into poverty, the Asian Development Bank (ADB) said.
“The economic recession from the COVID-19 pandemic threatens the job security and well-being of over 91 million international migrants from Asia and the Pacific,” the Manila-based multilateral lender ADB said in a report titled “COVID-19 Impact on International Migration, Remittances, and Recipient Households in Developing Asia” released Monday.
“Migrant and informal workers are among those facing the most severe impacts, as they often do not have regular contracts nor strong bargaining power. Migrant workers are more vulnerable from layoffs once prolonged lockdowns and production breaks drive companies out of business,” the ADB said.
In the case of the Philippines, the ADB projected a 20.2-percent fall in remittances in 2020 under a worst-case scenario of the pandemic raging on for one year.
Across all Filipino households, 8.4 percent received remittances from overseas, the ADB noted. In particular, “the highest prevalence of citizens receiving remittances is among senior citizens, at over 21 percent,” the ADB said, citing Philippine Statistics Authority (PSA) data.
Citing another recent study, the ADB said that compared to projected levels pre-pandemic, actual remittance inflows to the Philippines may fall by as much as 23-32 percent this year due to “adverse macroeconomic shocks in host-economies,” adding that this would result into 2.2-3.3 percent reduction in household spending per capita.
Remittances accounted for over a tenth of the Philippines’ gross domestic product (GDP) last year.
The quarantine restrictions on movement of people were nonetheless helping recipient-households adapt to digital and online banking as well as money transfer services.
“WorldRemit, the online money transfer company, observed a 40-percent uptick in the number of new customers sending money to the Philippines from February to March,” the ADB said.
“International remittances flowing to the Philippines are transferred predominantly via money transfer operators (72.4 percent). With much of the recipient households unbanked, the share of transfers through banks is only 26.4 percent,” the ADB noted.
The ADB also noted that last year, six of the 10 biggest recipients of global remittances were in Asia-Pacific: India, China, the Philippines, Pakistan, Bangladesh, and Vietnam.
Across the Asia-Pacific region, the ADB projected total remittances to dip to $31.4 billion (baseline scenario) and $54.3 billion (worst-case scenario) this year, or 11.5 percent and 19.8 percent of baseline remittances, respectively.
The baseline scenario assumed it would take about six months to control domestic COVID-19 outbreaks and normalize economies, while the worst-case projected a one-year pandemic.
Across the region, the ADB warned that “without continuous remittance flows, remittance-dependent households can fall into poverty or have difficulty meeting basic essential needs, as well as access education and health services.”
“Loan repayment is another challenge for remittance recipient households. The increasing incidence of overseas migration among poorer households highlights the relative ease of access to finance in paying for migration-related costs during the past decade,” the ADB added.
“Many of the existing emergency social protection measures introduced by the governments are linked to employment (such as unemployment benefits, minimum wage guarantee program) and these by design will not reach hard-hit remittance recipient households. It is important that households experiencing general income loss, including from remittance sources, are also covered in assistance through measures such as cash transfers,” according to the ADB.
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