As reported on April 23, 2020, the World Bank forecasted that remittances to the East Asia and Pacific regions would fall about 13% in 2020, due to global job losses amid the COVID-19 pandemic, mainly “driven by declining inflows from the United States, the largest source of remittances to the region.” Specifically, the Philippine government anticipates a 20-30% decline in remittances from overseas Filipino workers (OFWs) for 2020. In 2019, remittances from OFWs totaled about PHP 1.7 trillion (USD 35.2 billion), which equaled about 10% of the country’s GDP. In this regard, the Philippines is the fourth-largest recipient of remittances globally, whereas about 75% of the sum is spent on essentials, such as food, education, and health care. Even though extreme poverty in the Philippines had been declining in the past years, extreme poverty is estimated in about 20% of the Philippines’ population.
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Analyst Comment:
Considering that remittances constitute such an important share in the Philippines’s population average income, Pinkerton assesses that a prolonged economic weakness owing to the drop in remittances will highly likely result in higher rates of criminality and social unrest in the medium term. First, declines in foreign inflows are likely to strain the Philippine’s balance of payments and ultimately affect its currency’s performance amid heightened market turmoil, decisively eroding the population’s purchasing power. Wider segments of the population will likely then be pressured to incur in acts of criminality. Urban areas will likely remain of most concern in this regard, but it should not be disregarded that production, trafficking, and consumption of illegal drugs occurs throughout the country. Security forces, which according to national statistics of index and non-index crimes, had been successful in decreasing criminality rates from 2018 to 2019, are likely to respond decisively, likely inviting instances of police abuse.
Second, as OFWs are repatriated due to global job losses, demands against the government to increase employment rates will likely build up. On April 1, 2020, a demonstration in Metro Manila to demand food and relief supplies during the COVID-19 lockdown took place. However, riot police reportedly broke up the protest and arrested at least 20 people. Security forces will likely not hesitate to use force on violent protesters, particularly as long as cases in the Philippines keep growing.
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