OFW remittances decline for second straight month

Personal remittances by overseas Filipino workers (OFWs) in February rose from a year earlier, but marked a second monthly slowdown since December 2013.

Data released by the Bangko Sentral ng Pilipinas (BSP) showed that remittances in February grew 6% to $1.99bn from $1.88bn in the same month last year.

But the February figure marks a decline from $2bn posted in January this year and from $2.4bn in December the previous year.

The central bank attributed the year-on-year increase in personal remittances to the steady rise in transfers of land-based workers with long-term contracts (4.3%), and sea-based and land-based workers with short-term contracts (10.3%).

Standard Chartered Bank economist Jeff Ng, however, said the second consecutive month of lower-than-expected remittance growth is slightly “disappointing” and could affect the country’s current account surplus.

“The data is slightly disappointing and poses downside risks to the current account surplus. We expect the current account surplus to narrow to 3.6% in 2014, from 4.3% in 2013,” he said.

The Philippines’ current account is the sum of net receipts from sales abroad of goods and services, overseas income and other current transfers, including remittances from OFWs.

Personal remittances represent the sum of net compensation for OFWs; personal transfers such as current transfers in cash or in kind by OFWs, as well as other household-to-household transfers between Filipinos abroad and capital transfers between households.

The February remittance figure brought the cumulative amount of remittances for the first two months of the year to $3.99bn, indicating year-on-year growth of 6.4%. Last year, January to February cumulative remittances stood at $3.75bn.

Focusing on the brisk year-on-year pace of growth, Bank of the Philippine Islands associate economist Nicholas Antonio Mapa said the remittances give comfort to authorities that consumption and investment, particularly in cars and housing, will continue to be strong in the coming months.

Mapa said OFW remittances continue to be a reliable source of both foreign exchange and funding for consumption.

The US, Saudi Arabia, United Arab Emirates, United Kingdom, Singapore, Japan and Canada were the major sources of cash remittances.

Full-year 2013 personal remittances reached $23.35bn. This year, the BSP expects cash remittances to reach P23.6bn, growing by 5%. –Mayvelin U Caraballo, Manila Times