OFW remittances up 4% in August

MANILA, Philippines — The amount of US dollars sent home by overseas Filipino workers (OFWs) to their families in the Philippines grew at a faster rate of more than four percent in August, according to the Bangko Sentral ng Pilipinas (BSP).

It said personal remittances – the sum of net compensation of employees, personal transfers, and capital transfers between households – went up by 4.3 percent to $3.02 billion in August from $2.89 billion in the same month last year.

The BSP attributed the increase to the 4.7 percent rise in remittances sent by land-based workers with work contracts of one year or more to $2.31 billion from $2.21 billion, as well as the 3.1 percent increase in remittances from sea and land-based workers with work contracts of less than one year to $650 million from $630 million.

From January to August, personal remittances increased by three percent to $23.43 billion from $22.67 billion in the same period last year.

The BSP also reported a 4.3 percent increase in cash remittances coursed through banks, to $2.72 billion in August from $2.61 billion in the same month last year.

“The expansion in cash remittances in August was due to the growth in receipts from land-based and sea-based workers,” it said.

Cash remittances from land-based workers grew by 4.7 percent to $2.13 billion in August from $2.03 billion in the same month last year, while the amount sent home by sea-based workers increased by 2.9 percent to $590 million from $580 million.

For the first eight months, cash remittances rose by three percent to $20.98 billion from $20.38 billion in the same period last year.

In terms of country source, the central bank said the growth in cash remittances from the United States, Singapore, Saudi Arabia, Japan and the United Kingdom contributed largely to the increase in remittances between January and August.

Despite the pick-up, the growth recorded during the eight-month period is below the four percent growth target set by the BSP for this year.

Last year, personal and cash remittances grew by 5.1 percent to record levels of $34.98 billion and $31.42 billion, respectively.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), said that OFW remittances are still considered a bright spot for the Philippine economy especially on consumer spending, which accounts for at least 68 percent of the country’s gross domestic product.

Ricafort attributed the modest single-digit growth in OFW remittances in recent months to elevated US and global inflation and higher interest rates in recent months that somewhat slowed down the global economic recovery.

The peso has depreciated by 15.7 percent to a new record low from the end 2021 level of 50.999 to $1.

Ricafort said whatever gains OFWs and their families may have due to more peso proceeds for their dollars may be negated by higher consumer prices.

“This is somewhat prompting the need to send more OFW remittances to the country. Thus, there may still be a need to send more OFW remittances due to higher prices, which erodes whatever foreign exchange gains due to the stronger dollar versus major global currencies,” he said.