Three Thoughts from London – Remittances, Protests and Corbynomics

  1. Legal barriers to remittances by Philippines workers abroad are becoming an important risk for the country.
  2. There are several takeaways from mass anti-government protests in Brazil on Sunday, here we highlight three.
  3. Former labour leaders continue to stick their oar in the race for the new leadership as the party looks evermore fractured.

1) Legal barriers to remittances by Philippines workers abroad are becoming an important risk for the country. Several countries (US, Australia, New Zealand and the UK) have already shut down remittance firms last year in an effort to clamp down on terrorist financing. It is estimated that around 10 mln Filipinos work overseas and they sent back some $24 bln of their earnings last year, around 10% of GDP. Also of note, about 1.5 mln of these workers are maids. The government’s increased efforts to reduce abuse and standardize contracts ($400 minimum pay per month, for example) have led to a decline of growth rate in the sector. The Labour Minister reported a 20% drop in the number of maids traveling abroad in the Jan-May period, to about 60,000. Today the country reports its June remittance number, which is expected to fall slightly to 5.4% y/y from 5.8%. For reference, the growth rate over the last 5 years has been 6.9%, and the 10-year average has been 10.1%.

17-08-2015 11-00-502)  There are several takeaways from mass anti-government protests in Brazil on Sunday, here we highlight three. (1) With around 460K estimated protestors in Sao Paulo, attendance was larger than the April 12 protests (275K) but smaller than the March 15 one (1.2 mln). These are the numbers from Military Police. (2) Protests were peaceful, avoiding the worst case scenario. (3) But perhaps the most important development was the strong focus on Lula. A giant inflatable caricature of the former president in prison clothes seemed to have been the meme of the event. Recall that Lula is arguably the most important politician in the country, the central pillar of the PT ruling party, and presumed candidate for the 2018 elections. Many observers believe that the weakening of Lula all but assures a rotation of power for the country.

3) Former labour leaders continue to stick their oar in the race for the new leadership as the party looks evermore fractured. Here are a few colourful quotes. Last week, former PM Tony Blair said that “the party is walking eyes shut, arms outstretched over the cliff’s edge to the jagged rocks below.” This weekend, former PM Gordon Brown urged the party not to adopt an ideology of “permanent protest.” Also, the term Corbynomics has caught on as a derogatory way to characterize Jeremy Corbyn’s ideas. All the while, Conservatives seem to be rejoicing. The results of the race for the leadership of the Labour Party will be announced on September 12.