Remittances on a roll, up for 6th straight month

by Lawrence Agcaoili – The Philippine Star, 16 Sep 2021

MANILA, Philippines — Remittances from abroad climbed for the sixth straight month in July amid the continued reopening of economies hosting overseas Filipino workers (OFWs), according to the Bangko Sentral ng Pilipinas.

BSP Governor Benjamin Diokno said personal remittances rose by 2.6 percent to $3.17 billion in July from $3.08 billion in the same month last year as land- and sea-based OFWs sent more money to their families back home.

This was the highest monthly personal remittances since the $3.2 billion recorded in December last year. Personal remittances include all current transfers in cash or in kind by OFWs as well as other household-to-household transfers between Filipinos who have migrated abroad and their families in the Philippines.

Diokno said personal remittances from land-based workers with work contracts of one year or more inched up by 1.6 percent to $2.51 billion in July from $2.45 billion in the same month last year.

Likewise, remittances from sea- and land-based workers with work contracts of less than one year grew by 6.9 percent to $595 million from $557 million.

As a result, the BSP chief said personal remittances increased by six percent to $19.78 billion from January to July compared to last year’s $18.66 billion.

Diokno also reported that cash remittances coursed through banks went up by 2.5 percent to $2.85 billion in July from $2.78 billion in the same month last year. This was also the highest since the $2.89 billion recorded last December.

Data showed cash remittances from land-based workers inched up by 1.6 percent to $2.31 billion from $2.27 billion, while that of sea-based workers grew by 5.8 percent to $545 million from $510 million.

From January to July, Diokno said cash remittances expanded by 5.8 percent to $17.77 billion from $16.8 billion a year ago.

“The growth in cash remittances in the first seven months of 2021 came largely from the US, Malaysia and South Korea,” the BSP chief said.

In terms of country sources, the US continues to register the highest share of overall remittances at 40.4 percent, followed by Singapore, Saudi Arabia, Japan, the United Kingdom, United Arab Emirates, Canada, South Korea, Qatar and Taiwan.

Both personal and cash remittances have been recording growth after contracting by 1.7 percent in January. The 2.6 percent growth in personal remittances was the slowest this year as it peaked at 13.3 percent in May, while the 2.5 percent rise in cash remittances was also the smallest for the year as it peaked at 13.1 percent also in May.

However, the BSP sees remittances recovering with a four percent growth this year after slumping by 0.8 percent last year as more than half a million OFWs were displaced in host countries due to the impact of the COVID-19 pandemic.

ING Bank Manila senior economist Nicholas Mapa said OFW remittances would continue to provide support for the peso.

The local currency has depreciated by about four percent to 49.91 to $1 as of Tuesday after appreciating to 48.04 to $1 in end-2020. It earlier breached the 50 to $1 level due to the hawkish tilt by the US Federal Reserve last June.

“Remittances will provide some support for the peso but a widening trade gap and portfolio outflows to keep peso on depreciation trend,” Mapa said.

Latest data from the Philippine Statistics Authority (PSA) showed the country’s trade deficit swelled by 57.7 percent to $21.31 billion from January to July compared to $13.51 billion in the same period last year as trade recovers with the reopening of the global economy from a major shutdown caused by the COVID-19 pandemic.

In the first seven months of the year, imports jumped by 30.2 percent to $63.7 billion from $48.91 billion, while exports increased by 19.7 percent to $42.39 billion from $35.4 billion.