Remittances recover in Oct, grow fastest in 7 months

MANILA, Philippines — Remittances from overseas Filipinos rebounded strongly in October after shrinking in September, growing fastest in seven months amid the steady demand for skilled workers, the Bangko Sentral ng Pilipinas (BSP) said.

BSP Governor Nestor Espenilla Jr. said personal remittances went up 9.7 percent to $2.55 billion in October from $2.33 billion in the same month last year.

The growth in October was the fastest since personal remittances booked a double-digit growth of 11.2 percent last March.

Personal remittances represent the sum of net compensation of employees, personal transfers, and capital transfers between households. It measures cash and non-cash items that flow through both formal or via electronic wire and informal channels such as money or goods carried across borders.

For the first 10 months, personal remittances including other household-to-household transfers went up 5.2 percent to $25.72 billion from a year-ago level of $24.43 billion.

On the other hand, Espenilla said cash remittances grew 8.4 percent to $2.27 billion in October from $2.1 billion in the same month last year. This was also the fastest growth since posting a double-digit expansion of 10.7 percent last March.

The BSP chief said the major sources of cash remittances include the United Arab Emirates and the US.

The total remittances coursed through banks rose 4.2 percent to $23.06 billion from January to October, compared to $22.12 billion in the same period last year.

“The increase was boosted by the increase in remittances from land-based workers and sea-based workers, which both grew by 4.2 percent compared to the level posted a year ago,” he said.

Cash remittances from the US, UAE, Saudi Arabia, Singapore, Japan, United Kingdom, Qatar, Kuwait, Germany and Hong Kong accounted for 80.2 percent of the total cash remittances in the first 10 months.

For 2017, the BSP has set a four percent growth target for remittances that contribute nine percent of the country’s gross domestic product (GDP).

Aside from boosting consumption, remittances together with business process outsourcing and tourism receipts also serve as a major source of foreign exchange buffer that help shield the Philippines from external shocks.

ING senior economist Joey Cuyegkeng said remittances are seen growing four percent this year and next year butwould be inadequate to cover the trade deficit even if revenues from business process outsourcing (BPO) sector are included.

“The result of a steady OFW remittance growth and deterioration of the trade deficit leads to continued inadequate financing of the trade deficit with remittances which started in 2016 and is likely to continue in the coming years,” he said.

On the other hand, Cuyegkeng pointed out the outsourcing industry is facing challenges in meeting its $39 billion revenue target by 2022.

“Competitions has intensified not only from our usual competitors but also other emerging markets are also new competitors. Uncertainty over the Philippine’s outsourcing fiscal incentives also could affect investments to the industry,” he said.