World Bank sees 5% drop in remittances

The World Bank expects remittances from Filipinos living and working overseas to decline by 5 percent this year even as the Philippines will remain the fourth-biggest recipient of these dollar inflows due to cheap remittance fees.

In its October Migration and Development Brief titled “COVID-19 Crisis Through a Migration Lens,” the World Bank projected the top five destinations of remittances last year —India, China, Mexico, Philippines and Egypt—to keep their same ranking this year.

But in the case of the Philippines, the World Bank sees remittances declining to $33.3 billion in 2020, equivalent to 9.1 percent of gross domestic product (GDP), from $35.2 billion in 2019 as more than 300,000 migrant Filipino workers were expected to come back home by year’s end as a result of the pandemic-induced global recession.

The World Bank said remittance flows from the United States—which accounted for 38 percent of the 2019 total—“remain somewhat resilient” as these grew by 5.8 percent year-on-year during the first eight months.

On the other hand, end-August remittances from Europe and the Middle East dropped by 16.1 percent and 13.2 percent year-on-year, respectively, the World Bank noted.

Europe and the Middle East comprised 13.2 percent and 19.8 percent, respectively, of last year’s total remittances.

“This likely reflects the absence of formal safety nets available to migrant workers in many host-countries in the face of the pandemic and the large repatriation of Filipino workers,” the Washington-based multilateral lender said.

Citing data from the Philippine Overseas Labor Office, the World Bank said more than 230,000 overseas Filipino workers (OFWs) returned home as of early this month, equivalent to about half of OFWs who had been laid off from work.

The repatriated OFWs so far accounted for over a tenth of the estimated 2.2 million migrant workers in September last year, while 22 percent who were mostly living in Europe decided to stay there instead of coming back to the Philippines, the World Bank said.

“According to the country’s Department of Foreign Affairs, as of Oct. 7, 10,849 OFWs had tested positive, of which 6,905 had recovered and 800 had died,” the World Bank added.

Amid the pandemic, the World Bank said the average cost of sending remittances to East Asia and the Pacific region climbed by 7.05 percent during the third quarter, faster than the 6.96-percent increase recorded in the second quarter.

Filipinos sending money home nonetheless enjoyed one of the lowest remittance fees in the region, especially those who remitted to the Philippines from Singapore, Kuwait, the United Arab Emirates and Spain.

To resume overseas employment, the World Bank said the Philippines was keenly looking into alternative labor markets for Filipino workers such as China and Eastern Europe.

Also, the World Bank noted that the Philippine government was offering free retraining programs for select jobs such as call-center agents, teachers and contract tracers, while migrant worker groups are lobbying for major construction projects that could help employ some of the repatriated workers.