Despite its ballooning inflation rate, the Philippines posted the second highest growth of remittances among developing countries for 2010, the World Bank said in a report released to the Philippine media Tuesday.
In the WB Outlook for Remittance Flows for 2011 to 2013, economists Sanket Mohapatra, Dilip Ratha, and Ani Silwal reported that remittances to the Philippines, adjusted for inflation in local currency terms, grew by -1.4 percent in 2010. The top performer in this area was China, which grew by 1 percent.
Published under the WB Migration and Development Brief on Monday, the report places these figures in the context of the “quick" recovery of developing countries from the 2008 global financial crisis.
“Officially recorded remittance flows to developing countries recovered quickly to $325 billion in 2010 after the global financial crisis," the WB explained. “But they have not kept pace with rising prices in recipient countries."
Overall, the WB said remittances to developing countries grew 5.6 percent in US dollar terms in 2010, “but grew by a smaller 3.9 percent after accounting exchange rate changes, and fell by 2.7 percent after adjusting for inflation."
In 2010, the Philippines’ inflation rate grew to 3.8 percent from 3.2 percent in 2009, according to the National Statistics Office.
PHL among top recipients
With $21.4 billion in remittances, the Philippines took the fourth largest share of remittances among developing countries in 2010, the WB said. The largest recipient was India with $53.1 billion, followed by China with $51.3 billion, and Mexico with $22 billion.
In US dollars, the WB said remittances to the Philippines grew by 8.1 percent in 2010 — the fourth largest growth in US-dollar terms, next to Vietnam with 17 percent, Lebanon with 11.3 percent, and Pakistan with 11.1 percent. The Philippines’ growth in this area ties with that of Egypt.
In local currency terms, the Philippines fared as the 8th among the 10 largest recipient countries in 2010, the WB said. The country posted a growth of 2.3 percent in this area, trailing Vietnam, Pakistan, Lebanon, Egypt, Nigeria, China, and Bangladesh.
“The reduction in local currency value of remittances implies hardship for recipients, and increased pressure on migrants to send more to maintain the purchasing power of their remittances," the WB noted.
For the East Asia and Pacific region, which includes the Philippines, the WB projected a growth of 6.8 percent in remittance inflows last year, 8 percent for 2012, and 9.5 percent for 2013.
“Given the volume of remittances flowing to developing countries, innovative financing tools such as diaspora bonds and remittance-backed bonds are being viewed as potential sources that can finance infrastructure and development projects at lower cost and longer maturities," the WB added.
Effect of Middle East, North Africa crisis
The multilateral bank also said the effect on migration of the political turmoil in parts of North Africa and the Middle East “appears to have been largely localized within the region."
“Outside the North Africa and Middle East region, the remittance recipient region that could be affected by the crisis is South Asia," the WB said.
However, the bank noted a “lack of reliable and high-frequency data on both migration and remittances during the crisis in North Africa and the Middle East."
“Basic facts on the impacts of the crisis for migrants and recipient countries are simply not available," the WB said. “There is urgent need for rapid monitoring systems in both migrant-sending and -recipient countries through improved data collection and dissemination of high-frequency data on migration and remittances."
Earlier this month, the Bangko Sentral ng Pilipinas reported that overseas Filipino workers’ remittances rose by 5.9 percent in the first quarter of 2011 amid earlier fears of a decline due to the political unrest in Middle East and North Africa, and the disasters in Japan. — VS
