16 Dec 2021 – Remittances grow 5.4% in 10 months

by Lawrence Agcaoili – The Philippine Star, 16 Dec 2021

MANILA, Philippines — Remittances from overseas Filipinos sustained their growth momentum for nine straight months, hitting a three-month high in October as the Christmas season approaches, according to the Bangko Sentral ng Pilipinas.

BSP Governor Benjamin Diokno said personal remittances increased by 2.4 percent to a three-month high of $3.12 billion in October from $3.04 billion in the same month last year.

This was the highest since the $3.17 billion recorded last July. Overseas Filipino Workers (OFWs)’ remittances usually pick up during the so-called ‘‘ber’’ months due to the holiday season.

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.

Dioko attributed the increase in personal remittances in October to the 2.8 percent hike in remittances sent by land-based workers with contracts of more than one year to $2.44 billion, as well as the 0.5 percent rise in the amount sent home by sea- and land-based workers with short-term contracts to $615 million.

From January to October, the BSP chief reported a 5.4 percent increase in personal remittances to $28.82 billion from $27.35 billion in the same period last year.

Diokno said cash remittances coursed through banks also grew by 2.4 percent to a three-month high of $2.81 billion in October from $2.75 billion in the same month last year. This was the highest since the $2.85 billion booked last July.

Cash remittances from land-based workers expanded by 2.8 percent to $2.25 billion, while that of sea-based workers inched up by 0.6 percent to $565 million, he said.

As a result, cash remittances went up by 5.6 percent to $23.12 billion from January to October from $21.89 billion a year ago.

“The growth in cash remittances from the US, Taiwan and Malaysia contributed largely to the increase in remittances in January to October,” Diokno said.

The US remained the major source of OFW remittances with a share of 40.9 percent during the 10-month period, followed by Singapore, Saudi Arabia, Japan, the United Kingdom, the United Arab Emirates, Canada, Taiwan, Qatar and South Korea.

According to the BSP, the top 10 sources of remittances cornered a share of 79 percent from January to October.

Both personal and cash remittances have been growing after contracting by 1.7 percent in January.

The BSP is now expecting OFW remittances to grow by six percent instead of four percent this year amid the continued reopening of the global economy from strict COVID-19 lockdowns.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said

OFW remittances remain a bright spot for the Philippine economy, near the highest since the COVID-19 pandemic started and also near record highs, despite the fact that more than 800,000 OFWs were repatriated.

Ricafort said some of the displaced OFWs have been redeployed as the global economy re-opened and recovered further from the adverse effects of the pandemic.

He added OFW remittances and conversion to pesos are expected to seasonally increase in the fourth quarter especially toward the Christmas season, supporting faster growth in consumer spending.

“OFW remittances could improve further in the coming months that support the country’s economic recovery prospects from COVID-19, as the global economic recovery would still improve further, ” Ricafort said.

ING Bank senior economist Nicholas Mapa said OFW remittances continue to support the country’s domestic consumption story.

“The modest gain, however, means that the current account likely swung into deficit, putting pressure on the peso in the near term,” Mapa said.

Remittances remain a major source of foreign exchange buffer in supporting the peso. The local currency continued to weaken in recent months, still among the weakest since May 2020 and already depreciated by 4.8 percent since the start of the year.