THE Philippines will be among the hardest hit economies in Southeast Asia when it comes to the decline in remittances this year, according to the Asian Development Bank (ADB).
In a Policy Brief, the ADB said remittances in the Philippines are expected to decline by 20.2 percent in the worst-case scenario. This will affect 8.4 percent of households receiving remittances locally.
On Monday, the Bangko Sentral ng Pilipinas (BSP) reported that remittances declined 19 percent in May, as the impact of Covid-19 was hitting host countries, displacing thousands of OFWs.
Meanwhile, the other Southeast Asian country that will suffer a large reduction in remittances is Indonesia, with a 21.4-percent decline in remittances. However, only 3.3 percent of its households receive remittances.
“The countries likely to face more severe effects from the pandemic-induced decline in remittance inflows are the ones where remittance shares to GDP and per capita remittances are high,” ADB said.
“Central Asian countries such as Georgia, the Kyrgyz Republic and Tajikistan, sending a large number of seasonal and long-term migrants mainly to the Russian Federation and Europe, will also be hard-hit, along with some of the major migrant origin countries such as Nepal and the Philippines,” it added.
Jica fellows’ study
THE ADB said its findings are consistent with that of Jica Ogata Sadako Research Institute for Peace and Development Research Fellow Enerelt Murakami, Executive Senior Research Fellow Satoshi Shimizutani and Research Fellow Eiji Yamada.
In July, the researchers said their estimates showed remittances to the Philippines will contract by 23 percent to 32 percent this year and cut household spending per capita by 2.2 to 3.3 percent.
The ADB said overseas Filipino workers (OFWs) have been severely affected by travel bans imposed to prevent the spread of the coronavirus disease (Covid-19).
The travel bans have significantly affected OFWs, many of whom work in the global travel and tourism industry as well as logistics firms as seafarers.
The ADB said that as a result of restrictions imposed on international mobility, as of June 21, the Department of Foreign Affairs (DFA) repatriated over 29,000 sea-based overseas Filipinos, accounting for more than a third of the global maritime workforce.
As of end-July, the DFA reported more than 100,000 OFWs have been repatriated from labor-hosting countries around the world, as the pandemic shuttered or impacted businesses they work for.
“For Southeast Asia, the Philippines is the most affected, with remittances falling over 20 percent; and others by over 15 percent. Remittances for most of the Pacific island economies are expected to fall by around 13 percent. In general, the magnitude of the impact on remittances by economy reflects the distribution of the decline in GDP observed in the host economies,” the ADB said.
The policy brief said the recession from the pandemic threatens job security and the well-being of over 91 million international migrants from Asia and the Pacific.
Total remittances to Asia are expected to fall by between $31.4 billion (baseline scenario) and $54.3 billion (worst-case scenario) in 2020—equivalent to 11.5 percent and 19.8 percent of baseline remittances, respectively.
The potential drop in remittance flows to developing Asia—particularly in the Pacific and Central and West Asian economies, where many households depend on international remittances—could push people into poverty.
In order to help migrant workers, the ADB suggested that both the source and host countries of migrant workers help manage these Covid-19 impacts by extending temporary health and social services to assist stranded and returned migrants.
These countries could also expand the coverage of social protection to low-income remittance recipient households who may fall back into the poverty trap.
The ADB cited a need to design a comprehensive national migration policy framework that encompasses immigration, health and labor policies to support migrant workers and improve their rights and welfare.
Lastly, the ADB said these countries should ensure the continuity of remittance services and enabling business environment for service providers, including the use of digital and online platforms to better serve migrants and their families.
Image credits: Nonoy Lacza