BSP keeping close watch over Middle East developments
MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) is closely monitoring developments in the Middle East and its impact on oil prices, inflation, and remittances from overseas Filipinos.
BSP Deputy Governor Nestor Espenilla Jr told reporters on the sidelines of a book launch that monetary authorities will assess the extent and coverage of the diplomatic crisis in the Middle East.
"The situation is just unfolding so we don’t know yet the extent and coverage. I think at this time it is best to monitor the situation,” he said.
The Gulf has been hit by its biggest crisis in years after Saudi Arabia, the United Arab Emirates, and Bahrain severed ties with Qatar for allegedly supporting terrorists.
"We need to look at a longer term perspective so too soon to draw anything from this, but it bears close watch,” he added.
The crisis could affect the price of oil in the international market and could drive up inflation.
A drag in remittances?
Likewise, the issue could pull down cash remittances as several Filipinos are deployed in the Middle East. (READ: Philippines suspends deployment of workers to Qatar)
However, the incoming BSP chief said there is strong demand for skilled Filipino workers amid the disruptions in the Middle East.
"We don’t know yet what is the extent and there could be alternative channels," Espenilla said.
"There were previous incidents in the Middle East including the all-out war and this did not significantly impede the flow of remittances. The deployment of overseas Filipinos is pretty diverse all over the world,” he added.
Espenilla pointed out it was still premature to draw any conclusion to news that is just unfolding. (READ: FAST FACTS: How big is the Filipino community in Qatar?)
"Any disturbance is a source of concern by the BSP especially since there are overseas Filipinos working there. That is why it is important to monitor the situation at this time,” he said.
The Philippine government announced on Tuesday that it was suspending the deployment of workers to Qatar because of the development.
Latest data from the central bank showed cash remittances went up 7.7% to $6.95 billion in the first quarter of the year, from $6.46 billion in the same quarter last year.
About 80% of the amount of money sent home to the Philippines came from the US, Saudi Arabia, United Arab Emirates, Singapore, Japan, United Kingdom, Qatar, Kuwait, Hong Kong, and Canada.
The Middle East emerged as the second biggest source of cash remittances with $1.97 billion from January to March this year, next to the Americas with $2.51 billion.
During the same period, remittances from Saudi Arabia inched up 2.2% to $676.09 million from $661.35 million, followed by the UAE, which went up 20% to $572.87 million from $477.36 million.
Remittances from Qatar jumped 35.2% to $306.03 million from $226.32 million, while remittances from Kuwait dipped by 12.3% to $196.3 million from $226.1 million.
The BSP’s Monetary Board has an inflation target of between 2% to 4% for this year until 2020. – Rappler.com