"We expected a contraction in remittances after the sub-prime crisis in 2008 and the later eurozone crisis, but this wasn’t the case," says Alfred Dy, head of research at CLSA in Manila. "Remittances continued to come back to the Philippines. Although growth decreased, the amount of remittances continued to increase overall. Remittances are one of the key areas to GDP growth. And the Philippines is one of the biggest suppliers of labour overseas, accounting for 10 million workers abroad."
OFW remittances reached $18.8 billion in 2010, up 8.2% on 2009. In 2011 they were up by 7.2%, reaching $20.1 billion. This was equivalent to 10% of GDP in 2011. Remittances have grown more slowly as a result of recent financial crises and although they continue to contribute strongly to GDP, some analysts expect the downward trend to continue.
"Remittances will gradually slow down," says Luz Lorenzo, an economist and head of the research department at ATR Kim Eng Securities in Manila. "Most Filipino workers abroad are on contracts that haven’t expired as yet. But workers abroad might find that their contracts will not be renewed in light of global financial constraints."
Fortunately, this will be a slow process.