OFWs send home more money despite crisis

By Bianca Cuaresma, BusinessMirror, 17 Nov 2020

DESPITE dismal economic activity and thousands of layoffs all over the world, overseas Filipino workers (OFWs) still managed to send more money back home in September, latest data from the Bangko Sentral ng Pilipinas (BSP) showed.

The BSP reported on Monday that cash remittances from OFWs hit $2.6 billion in September, growing by 9.3 percent from the $2.34 billion they sent in September 2019 last year. The 9.3-percent growth was the strongest monthly data seen for remittances since April 2018. The 9.3-percent growth in September also comes at the heels of a 4.1-percent contraction in the money OFWs sent in August.

BSP Governor Benjamin Diokno has earlier acknowledged that remittances may not necessarily reflect the state of the global economy, as OFWs usually have an “altruistic character” and they tend to find ways to send money to their family back home, crisis or no crisis.

ING Bank economist Nicholas Mapa also said that remittances to the Philippines have continued to “defy expectations”, with the September print being the latest surprise to their forecasts.

The September inflow of remittances pushed the nine-month total money sent home to $21.89 billion. This is 1.4 percent lower than the total money they sent in January to September last year. This is significantly better than the BSP’s forecast of a 5-percent decline in remittances on average by the end of the year.

By country source, Filipino migrant workers from the United States, Singapore, Qatar, Hong Kong and Taiwan sent more money in the first nine months of this year compared to the same period last year. Their higher remittances compensated for the declines in remittances from Filipinos in Saudi Arabia, the United Arab Emirates, Germany, Kuwait and the United Kingdom.

The US posted the highest share to total remittances at 40.1 percent, followed by Singapore, Saudi Arabia, Japan, the UK, the UAE, Canada, Hong Kong, Qatar and Taiwan. The combined remittances from these countries accounted for 78.8 percent of total cash remittances.

Last hurrah?

Mapa said while September remittances spell a positive surprise for the country, this does not mean that it is on its way to trend upwards in the coming months.

The economist said that in the face of job losses and muted economic activity abroad, Filipino migrant workers likely sent money from their life savings.

“Overseas Filipino remittances managed to expand 9.3 percent with the rise in migrant flows likely tagged to Filipinos sending home their savings prior to repatriation and the temporary reopening of economies post lockdown,” he said.

“We’ve noted the practice carried out by overseas Filipinos set for repatriation to send home their life savings ahead of their return, which may have caused a one-off surge in remittances in the past few months,” he added.

Mapa still believes that remittance flows may end up still about 5 percent lower than what was seen in the previous year, as up to 300,000 Filipino workers are repatriated to the Philippines after job losses in their host countries.

“Meanwhile, renewed lockdowns in parts of Europe and the US will likely delay the economic and trade recovery, which will in turn have an adverse impact on remittance flows in the near term,” Mapa said.