The Unlawyer

Many Philippine retailers like myself pay close attention to the remittances sent home by overseas Filipino workers (OFW) as an indicator of how well, or how poorly for that matter, our respective businesses will fare in the months ahead in an economy that, for the most part, is driven by domestic consumption – up to 70 percent, as some sources say.

So it was with bated breath that I eagerly awaited what this October’s OFW remittances were, as these figures were generated in the first full month since the global financial crisis hit the world in its collective solar plexus.

First, the good news:

“Cash sent home by overseas Filipino workers (OFW) reached $1.4 billion in October, the second-highest monthly amount recorded ever since 1989, the year when Philippine government started monitoring remittances.

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“Moreover, remittances for the first ten months this year hit $13.7 billion, a 15.5 percent increase compared to the same ten-month period last year.”

Then there’s the bad news:

“Remittances from Filipinos based overseas grew 3.3 percent in October [From a year earlier - Ed.], its the weakest pace in over a year, data from the Bangko Sentral ng Pilipinas showed.”

While this figure is a cause of concern, I would like to see what the November and December 2008 OFW remittance rates will be in order to obtain a better picture of what 2009 will hold in store not just for retailers but for the broader Philippine economy as well.

There is a reason to be hopeful as the BSP itself said in its report on October’s OFW remittance figures:

“Preliminary data from the Philippine Overseas Employment Administration (POEA) indicated that, during the first ten months of 2008, the number of Filipinos deployed abroad rose considerably by 25.5 percent to 1,115,199, from 888,339 a year ago. While there could be a slowdown in the rate of deployment as a result of global financial strains, this could be moderated by employment opportunities in some host countries such as Canada, some other Middle Eastern countries, and more recently, South Australia, which have sounded off their need for more skilled manpower to address skills shortage.”

Then there’s this report from the Wall Street Journal: Manila Banks on Its Expats.

“This vital cash flow could slow, of course, if the global economic outlook continues to deteriorate and Filipino expatriate workers lose their jobs. But for now, the Southeast Asian nation appears well-positioned to ride out the current storm. Unlike some countries that are heavily dependent on remittances, the Philippines’ expatriates are more likely to be filling professional roles in the fields of education and health care, which economists see as less vulnerable to layoffs during a recession.”

Anyway, here is another indicator that may help Philippine retailers predict what the spending patterns of expatriate Filipinos and their families will be in the next few months: OFW households holding on to cash amid credit crunch.

“In its Consumer Expectations Survey, the BSP said OFW households that were polled are setting aside a smaller amount of remittances for savings, particularly on bank deposit instruments, with plans of cutting investments in the fourth quarter.

“Moreover, these households are spending more of their money on essentials, such as food, education, medical expenses, debt payments, but have set aside part of their income for the purchase of appliances and durable items.”

One class of expatriate Filipinos that may be adversely affected by the global economic crisis are merchant seamen who happen to be major contributors to the country’s balance sheet and their families’ pocketbooks:

“The amount of dollars sent home by sea-based Filipino workers abroad has been growing three times faster than remittances by their land-based counterparts, according to The Trade Union Congress of the Philippines (TUCP).

“Citing Bangko Sentral ng Pilipinas statistics, TUCP secretary-general and former senator Ernesto Herrera said Filipino sailors sent home a record $2.393 billion in the nine months to September, up a whopping 43.35 percent compared to the $1.669 billion that they remitted over the same period last year.

“In contrast, remittances by land-based Filipino workers abroad grew by only 12.17 percent to $9.879 billion in the nine months to September, versus $8.807 in the same period last year.”