MANILA, Philippines — Dollar earnings sent home to the Philippines by overseas Filipino workers (OFWs) increased by three percent in the first half of the year despite the slower growth recorded in June, the Bangko Sentral ng Pilipinas (BSP) said.
Latest data from the central bank showed personal remittances went up by three percent to $17.59 billion from January to June this year compared to $17.09 billion in the same period last year.
For the month of June alone, the sum of net compensation of employees, personal transfers and capital transfers between households inched up by 2.2 percent to $3.13 billion from $3.06 billion in the same month last year.
This was the slowest growth since the two percent increase recorded in May last year.
“The rise in personal remittances in June 2023 was due to higher remittances sent by land-based workers with work contracts of one year or more and sea- and land-based workers with work contracts of less than one year,” the BSP said.
Out of the six-month total, cash remittances coursed through banks grew by 2.9 percent to $15.79 billion from $15.35 billion in the same period last year.
According to the BSP, the growth in cash remittances from the US, Singapore and United Arab Emirates contributed mainly to the increase in remittances in the first half of the year.
In terms of country sources, the US posted the highest share of overall remittances during the period with 41.1 percent, followed by Singapore with 6.9 percent, Saudi Arabia with 5.9 percent, Japan with 5.1 percent and the UK with five percent.
For June alone, cash remittances inched up by 2.1 percent to $2.81 billion from $2.75 billion in the same month last year. This was also the slowest growth since the 1.8 percent rise booked in May 2022.
China Bank chief economist Domini Velasquez attributed the continued slowdown in the growth of remittances to the more challenging economic environment in host countries.
“At the same time, improving domestic conditions – a decline in inflation rate and improving employment conditions – could have reduced migrants’ and workers’ motivation to send additional money home,” Velasquez said.
For August, Velasquez sees a slight uptick in remittances due to the start of onsite schooling.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said Filipinos abroad continue to send more money to the Philippines amid relatively higher prices or inflation.
He said the further reopening of the economy toward greater normalcy after the COVID-19 pandemic also led to increased spending, with some pent-up demand or even some revenge spending by OFW families locally that are partly financed by increased remittances.
For the coming months, Ricafort said modest growth in remittances could still continue as OFW families still need to cope with relatively higher prices locally, as well as some normalization of spending by households for both essentials and non-essentials.
Ricafort added that risk of economic slowdown in the US, partly due to aggressive rate hikes delivered by the US Federal Reserve since March 2022 in an effort to bring down the elevated inflation, would still be a drag for OFW remittances.
The BSP missed its four percent growth target for the second straight year as remittances increased by only 3.6 percent in 2022. Personal remittances hit an all-time high of $36.14 billion last year, of which cash remittances hit a record-high $32.54 billion.
Source: The Philippine Star | August 16, 2023
