OFW remittances hit 2-month high

MANILA, Philippines — Dollar remittances climbed to a two-month high of $3.15 billion in September from $3.03 billion a year ago as Filipino expatriates send more money during the so-called “ber” months, according to the Bangko Sentral ng Pilipinas (BSP).

China Bank chief economist Domini Velasquez said remittances are expected to rise further ahead of the Christmas season.

“We might see more holiday remittances as Filipinos will likely celebrate with looser restrictions this year compared to the last,” she said.

Velasquez also attributed the increase to better economic outlook in some host countries, including the US, ASEAN and Middle East.

“Moving forward, we think that opportunities in biggest senders such as the US, Asia, and the Middle East, will offset weakness of remittances from Europe,” Velasquez said.

She said the start of face-to-face classes this month would bring in more remittances toward the end of this year.

The chief economist from the Sy-led bank also explained that high domestic inflation is compelling overseas workers to help out more in terms of sending money, while some are taking advantage of the weak peso.

Data released by the central bank showed personal remittances – the sum of net compensation of employees, personal transfers, and capital transfers between households – increased by four percent to $3.15 billion in September from   $3.03 billion in the same month last year.

This was brought about by the 4.2 percent rise in remittances sent by land-based workers with work contracts of one year or more to $2.44 billion from $2.34 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 September, personal remittances improved by 3.1 percent to $26.49 billion from $25.7 billion in the same period last year.

Likewise, cash remittances coursed through banks grew by 3.8 percent to hit a two-month high of $2.84 billion in September from $2.74 billion in the same month last year.

Cash remittances from land-based workers went up by 4.2 percent to $2.25 billion from $2.16 billion, while the amount sent home by sea-based workers increased by 2.5 percent to $590 million from $580 million.

During the nine-month period, cash remittances rose by 3.1 percent to $23.82 billion from $23.12 billion in the same period last year.

In terms of country source, the US topped the list with a share of 41.7 percent, followed by Singapore, 6.9 percent; Saudi Arabia, 5.9 percent; Japan, five percent; the United Kingdom,4.8 percent; United Arab Emirates,four percent; Canada, 3.5 percent; Qatar, 2.8 percent; Taiwan, 2.7 percent and South Korea,2.5 percent.

Despite the pick up, the growth recorded from January to September remains below the four percent target set by the BSP for this year.

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

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the amount of dollars sent home by OFWs is still considered a bright spot for the Philippine economy, especially on consumer spending, which accounts for at least 73 percent of gross domestic product (GDP).

“Nevertheless, the continued growth in OFW remittances may be attributed to the need to pay for higher prices or inflation locally for OFWs and their families, as well as to finance more of their local spending with the further reopening of the economy toward greater normalcy, such as for education in view of the resumption of face-to-face classes since August after more than two years,” Ricafort said.

Ricafort said modest single-digit growth in remittances in recent months may be partly attributed to elevated global inflation and higher interest rates in recent months that somewhat slowed down the recovery in the global economy and also partly weighed on both OFW employment and incomes especially in host countries.

The chief economist of the Yuchengco-owned bank also cited the depreciation of the peso against the greenback due to the aggressive rate hikes by the US Federal Reserve that fundamentally increased the peso equivalent of OFW remittances.

The local currency weakened by as much as 15.7 percent to close at an all-time low of 59 to $1 level several times in October, but has since appreciated to return to the 57 range as the BSP committed to tame inflation, as well as intervene in the foreign exchange market to smoothen volatilies.