Remittances from overseas Filipinos hit all-time high in 2018

by Lawrence Agcaoili (The Philippine Star) – Feb 16, 2019

But Annual Growth Slowest In 17 Years

MANILA, Philippines — Remittances from overseas Filipinos rose to a record high level last year despite recording the slowest growth in 17 years, the Bangko Sentral ng Pilipinas reported yesterday.

BSP Governor Nestor Espenilla Jr. said personal remittances rose by only three percent to a record high of $32.21 billion last year from $31.29 billion in 2017, driven by higher inflows from both sea- and land-based overseas Filipino workers.

For December alone, personal remittances consisting of cash and non-cash items that flow through both formal or via electronic wire and informal channels such as money or goods carried across borders went up by 3.6 percent to a monthly record high of $3.16 billion from $3.05 billion in the same month last year.

Espenilla said personal remittances remained a major driver of domestic consumption, accounting for 9.7 percent of gross domestic product (GDP) and 8.1 percent of the gross national income (GNI) in 2018.

On the other hand, the BSP chief said cash remittances coursed through banks rose by 3.1 percent to an all-time high of $28.94 billion last year from $28.06 billion in 2017.

This was the slowest growth for cash remittances since contracting by 0.3 percent in 2001.

“Cash remittances in 2018 remained strong amid political uncertainties across the globe. This is evident in Asia, the Americas, and Europe, which grew annually by 12.3 percent, 9.7 percent and 7.7 percent, respectively,” he said.

According to Espenilla, the growth in these regions made up for the 15.3 percent decrease in remittances from the Middle East brought about by the continued repatriation program of the government.

According to BSP data, the bulk or 79 percent of cash remittances last year came from the US, Saudi Arabia, United Arab Emirates, Singapore, Japan, the United Kingdom, Qatar, Canada, Germany, and Hong Kong.

Cash remittances climbed by nearly four percent to a monthly record high of $2.85 billion in December 2018 from $2.74 billion in December 2017, supported by the transfers from both land-based and sea-based Filipino workers, which grew by 2.8 percent and 4.6 percent from last year’s levels, respectively.

Remittances usually pick up during the “ber” months as Filipinos abroad send more money to their loved ones during the Christmas season.

The BSP has lowered its growth target for both personal and cash remittances to three from four percent for 2018 and 2019.

The weakening of the peso is a boon for beneficiaries of remittances as they end up getting higher peso value for their dollars. The local currency ended as the third weakest currency in the region last year after the Indian rupee and Indonesian rupiah.

The peso depreciated 5.3 percent to 52.58 to $1 last year from 49.93 to $1 in 2017 amid strong outflows due to the series of rate hikes by the US Federal Reserve as well as the full blown trade war between Washington and Beijing.

ING Bank Manila senior economist Nicholas Mapa said the peso may weaken to 54.64 to $1 in the third quarter before recovering to 54.04 to $1 in the fourth quarter.

Mapa said the country’s ballooning trade deficit would continue to be greater than remittances. Data showed the country’s trade gap widened by 38 percent to $41.44 billion last year from $27.38 billion as exports slipped 1.8 percent while imports booked a double-digit growth of 13.3 percent.