Remittance growth slows to 5.4% in February

MANILA, Philippines — Remittances from Filipinos overseas grew by a slower 5.4 percent to $2.53 billion in February from $2.39 billion in the same month last year, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

A double-digit year-on-year growth of 10.8 percent was registered in January.

For the first two months, personal remittances or   cash and non-cash items that entered the country through formal and informal channels such as money or goods carried across borders rose by 8.1 percent to $5.18 billion from $4.79 billion in the same period last year.

Remittances from land-based workers with work contracts of one year or more recorded a 6.5 percent growth to $4 billion, while those from sea-based and land-based workers with work contracts of less than one year rose by 9.7 percent to $1 billion.

Likewise, the BSP said cash remittances coursed through banks inched up by 4.5 percent to $2.27 billion in February from $2.17 billion in the same month last year. The growth was slower than the 9.7 percent rise recorded in January.

For the first two months of 2018, cash remittances totaled $4.65 billion, an increase of 7.1 percent compared to the $4.34 billion level posted in the same period last year.

The BSP said the increase was supported by cash remittances  from land-based workers with $3.7 billion and sea-based workers with $1 billion. 

The US, United Arab Emirates (UAE), Germany and Malaysia were the major sources of cash remittances for the month in review.

Remittances from the US and UAE each contributed 1.2 percentage points to the 4.5 percent overall growth.

Meanwhile, cash remittances from Germany and Malaysia each shared one percentage point to total growth in cash remittances.

By country, the bulk, or almost 80 percent, of cash remittances for the first two months came from the US, UAE, Saudi Arabia, Singapore, Japan, United Kingdom, Qatar, Germany, Hong Kong and Canada.

The BSP has set a four percent growth target for both personal and cash remittances this year.

Personal remittances went up by 5.3 percent to a record high of $31.29 billion last year from $29.71 billion in 2016, while cash remittances grew 4.3 percent to an all-time high of $28.06 billion from $26.9 billion.

Remittances from more than 10 million overseas Filipino workers are the second largest source of foreign exchange for the Philippines next to the earnings of the business process outsourcing (BPO) sector. It accounts for 10 percent of the country’s gross domestic product (GDP).

The money sent home by Filipinos abroad help finance the widening current account (CA) deficit resulting from the strong importation of capital equipment and raw materials to support the growing economy.

The weakening of the peso has spurred overseas Filipinos to send more money to their loved ones in the Philippines, fueling economic growth through robust private consumption.