OFW remittances up 3% in March

MANILA, Philippines — The amount of money sent home by overseas Filipino workers (OFWs) climbed by three percent to a two-month high in March, according to the Bangko Sentral ng Pilipinas (BSP).

Latest data released by the central bank showed personal remittances increased to $2.97 billion in March from $2.89 billion in the same month last year.

The sum of net compensation of employees, personal transfers and capital transfers between households in February was the highest since January’s $3.07 billion.

For the first quarter, personal remittances also grew by three percent to $8.9 billion from $8.65 billion in the same quarter last year.

Of the total amount, cash remittances coursed through banks also went up by three percent to $2.67 billion in March from $2.59 billion in the same month last year.

This was the highest since the $2.76 billion recorded in March last year.

The BSP reported a three-percent rise in cash remittances, to $8 billion from January to March compared to $7.77 billion in the same period last year.

“The growth in cash remittances from the US, Singapore, Saudi Arabia, and the United Arab Emirates contributed mainly to the increase in remittances in the first quarter of 2023,” the BSP said in a statement.

In terms of country sources, the US posted the highest share with 41.4 percent, followed by Singapore with 7.3 percent, Saudi Arabia with 5.8 percent, Japan with 5.1 percent, the United Kingdom with 4.4 percent, United Arab Emirates with 4.2 percent and Canada with 3.1 percent.

China Bank chief economist Domini Velasquez said that improving economic outlooks in advanced economies fueled the higher growth in remittances.

“The US looks to be heading for a soft landing, with recession now only expected in the fourth quarter and the labor market still robust. Meanwhile, the euro area and the UK are now projected to dodge a recession altogether this year,” Velasquez said.

However, she warned that persistently high inflation in Europe, especially in the UK, may prevent OFWs from sending more remittances back to the Philippines and keep remittance growth tepid over the coming months.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said personal remittances has slowed after hitting a monthly record-high of $3.49 billion in December, while cash remittances slipped since reaching an all-time monthly high of $2.16 billion also last December amid risks of recession in the US.

“The slowdown in OFW remittances data may also have to do with the relatively higher prices, inflation, cost of living in major host countries for OFWs that fundamentally reduced the remittances sent back to the Philippines,” Ricafort said.

Ricafort said  the slowdown in remittances was also partly due to the weaker peso exchange rate versus the dollar as the local currency has depreciated by nine percent compared to levels before Russia’s invasion of Ukraine started in February last year.

The weaker local currency, he explained, partly reduced the need to send more OFW remittances due to higher conversion rate for the dollar versus the peso.

However, he said the relatively higher inflation and prices locally may have necessitated some continued increase in OFW remittances sent to the country, as well as the continued reopening of the economy toward greater normalcy with some pent-up demand.

“For the coming months, single-digit or modest growth in OFW remittances could continue as OFW dependents still need to cope up with relatively higher prices locally that would require the sending of more remittances, as well as some normalization of spending by consumers for both essentials and non-essentials as the economy reopened towards greater normalcy with no more COVID restrictions as a policy priority,” Ricafort said.