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Lower remittances seen

REMITTANCES, the economy’s saving grace last year as a result of the government’s lackluster spending, will grow more slowly this year because of the economic crisis abroad, the World Bank says. The money sent home by the Filipinos abroad fuel household spending, supports the services sector, and keeps the country’s balance of payments in surplus. But the volumes will increase by only 3 percent this year and 5 percent next year, slower than the 6-percent growth projected last year, the Bank says. The Bangko Sentral itself projected only 5-percent growth this year, lower than the projected 7-percent expansion last year. Remittances grew 7 percent to $16.5 billion, equivalent to about 6.5 percent of the gross domestic product, in the year through October 2011, the World Bank says. “Overseas Filipino workers’ large remittance inflows have shown a counter-cyclical pattern and have insulated the country from external imbalances,” the World Bank said. But the Bank says external developments will affect the growth of remittances, including the Saudization of jobs in Saudi Araba which now limits the issuance of new work permits to Filipinos. “Moreover, a new Philippine law that bars [the] deployment of workers to countries which failed to sign international conventions protecting the rights of migrant workers may further pull down remittance growth once implemented,” the World Bank said. Bangko Sentral Governor Amando Tetangco Jr. said the remittances, exports, investments and official development assistance might be affected by the debt problems in Europe. “The advanced economies are expected to continue to struggle to prevent their fiscal imbalances from spilling over to the global financial markets, while emerging and developing economies [will continue to] grapple with weaker external demand and overheating pressures,” the Bangko Sentral’s Monetary Board said. “The economic conditions in Europe could weaken further in the period ahead, posing risks to external demand as well as to financial markets through risk aversion.”
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