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Philippines: World Bank sees 19.7% drop in remittances
MANILA, Philippines — Remittances to low and middle-income countries are expected to fall by 19.7 percent this year as migrant workers worldwide suffer layoffs and reduction in wages, the World Bank said yesterday.
In a report titled “COVID-19 Crisis Through a Migration Lens,” the multilateral bank said remittance inflows to low and middle-income countries are expected to fall to $445 billion this year from $554 billion in 2019.
This is expected to put pressure on poverty alleviation efforts in such countries as increased remittances have been shown to improve nutritional outcomes, increase spending on education, and reduce child labor in disadvantaged households.
“Remittances are a vital source of income for developing countries. The ongoing economic recession caused by COVID-19 is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies,” said World Bank Group president David Malpass.
“Remittances help families afford food, healthcare and basic needs. As the World Bank Group implements fast, broad action to support countries, we are working to keep remittance channels open and safeguard the poorest communities’ access to these most basic needs.”
The study noted that while Filipino migrant workers tend to send more money home in times of pandemics to soften the economic blow on their families, they, like others, are hard-pressed for resources in times of recession.
This claim was supported by the increase in remittance flows to the Philippines during the bird flu pandemic in November 2003, but a decrease in money sent home during the global financial crisis starting in September 2008.
World Bank noted that remittances to the Philippines rose faster by four percent in 2019 to $35.2 billion, around 9.9 percent of the gross domestic product. This was second largest in the Asia Pacific region, next to $68.4 billion remitted to China last year.
Year-on-year growth in remittances for January and February 2020 was 4.8 percent and 4.4 percent, respectively, “suggesting little slowdown to date.”
“However, the government is anticipating a 20 to 30 percent decline in remittances for 2020 and a corresponding growth rate of two percent due to the fallout from COVID-19,” said the report.
The report noted that migrant workers throughout the region are struggling amid the lack of financial support from host governments with many of them told to return home. Many, however, are unable to travel because of flight bans and cancellations.
Even those who are in their home countries insisted on flying back to their foreign employers for fear of losing their jobs.
“The Philippine government’s efforts to halt the spread of the coronavirus by banning travel to several countries – including Taiwan, China; Macau; Hong Kong SAR, China; and South Korea – was short lived amid resistance from overseas Filipino workers concerned about potential job losses if they were unable to travel back to their host countries after home visits,” said the report.
It noted, however, that deployment to these countries are expected to fall amid continued travel bans.
Source: https://www.philstar.com/business/2020/04/23/2009093/world-bank-sees-197-drop-remittances