Remittances recover from pandemic impact in June — BSP

MANILA, Philippines (UPDATE 1 7:05 a.m., Aug. 18) — Money sent home by Filipinos overseas snapped a three-month downtrend in June, helping narrow the six-month contraction as countries around the world start reopening their economies from coronavirus pandemic-led lockdowns.

Cash remittances coursed through banks jumped 7.7% annually in June to $2.45 billion, data released by the Bangko Sentral ng Pilipinas on Monday showed. The performance also marked the fastest growth rate since the 8% on-year uptick recorded in October 2019.

The recovery, however, was partly driven by low base from last year when cash inflows dropped 2.9%. 

Broken down, remittances from land-based Filipino migrant workers offset a persistent drop in cash inflows from sea-based workers. "The continued drop in sea-based workers’ remittances was due to the repatriation of many sea-based workers amid the ongoing COVID-19 pandemic, the BSP explained.

The uptick in June brought the six-month tally to $14 billion, down 4.2% annually albeit more tempered than 6.4% year-on-year decline recorded as of May. At this level, the year-to-date figure is now running below the central bank's forecast of 5% drop by year-end.

As it is, the recovery in remittances is a welcome development for the consumer-reliant Philippines, which had been counting on money sent home by Filipino expats to power up domestic consumption and beef up the country's dollar reserves.

The Philippines enforced one of the world's longest and toughest lockdowns in a desperate bid to stem contagion, a decision that meant sealing off borders and grounding planes, preventing OFWs from leaving.

The lockdowns also prompted banks and remittance centers to limit operations, making it difficult for OFWs to send money to their families back home. To make matters worse, stay-home orders abroad set off massive lay-offs in the host countries of OFWs, trigerring repatriations.

By country source, remittances in the first half mostly came from the United States, which cornered 39.7% of total inflows. Declines were noted in Saudi Arabia, UAE, Kuwait, Germany and the United Kingdom, figures showed.

Editor's Note: Added 2.9% contraction of cash remittances in June 2019.