Remittances grow for second straight month in March

MANILA, Philippines — Money sent home by Filipinos abroad posted another month of growth in March, but mainly due to benefits of a low base that hardly tell a convincing recovery.

What’s new

Cash remittances coursed through banks rose 4.9% year-on-year in March to $2.5 billion, the Bangko Sentral ng Pilipinas (BSP) reported Monday. That increased the first quarter tally to $7.59 billion, up 2.6% on an annual basis.

According to the central bank, 40.8% of cash inflows during the past quarter came from the US, a combination of those coming from the mainland and Filipinos elsewhere in the world who use American banks to transfer funds. Broken down, remittances from land-based workers grew 5% on-year to $1.95 billion while those from sea-based workers rose by smaller 4.5% to $566 million.

Why this matters

Remittances are vital to the consumption-reliant Philippines because they traditionally boost Filipinos’ purchasing power. These inflows augment earnings of families, whose spending helps power up an economy that historically gets 70% of its output from consumption.

Following the repatriation of 327,511 Filipinos last year and a decline in deployment of new migrant workers, remittances sagged 0.8% that, while minimal, was a first since 2001. BSP is hoping for a quick return to 4% growth this year.

What an analyst says

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said remittances will likely continue benefitting from “low base/denominator effects”, which means year-on-year readings in the coming months will likely turn out positive because 2020 figures were so low, bearing the brunt of the health crisis.

A return to strict lockdowns from late March to mid-April coupled with rising inflation also likely prompted Filipinos overseas to send more money to their families, Ricafort said.

“Tighter quarantine restrictions… amid new record high COVID-19 local cases recently could also increase the need to send more OFW remittances especially to assist adversely affected OFW families/dependents in the country,” he said in an e-mailed commentary.