HSBC sees strong remittances recovery in March

MANILA, Philippines — Remittances are expected to post a strong recovery of 20.5 percent in March after two consecutive months of decline, according to British banking giant HSBC.

“We expect March remittances to rise by 20.5 percent month-on-month, after two straight months of sequential contraction,” HSBC said in its latest Global Economic Calendar.

Personal remittances declined steadily to $2.53 billion in February from $3.05 billion in December, while cash remittances coursed through banks decreased to $2.27 billion from $2.74 billion.

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 quarter, HSBC said remittances likely grew by 4.5 percent, slightly faster than the four percent target set by the Bangko Sentral ng Pilipinas (BSP).

“This would lead to a rise of 4.5 percent year-on-year, which is the same as the previous month’s pace,” HSBC said.

Latest data from the central bank showed personal remittances rose by 5.4 percent to $2.53 billion in February from $2.4 billion in the same month last year, while cash remittances went up by 4.5 percent to $2.27 billion from $2.17 billion.

This translated to an 8.1 percent growth in personal remittances to $5.18 billion in the first two months from $4.79 billion in the same period last year, while cash remittances booked a 7.1 percent increase to $4.65 billion from $4.34 billion.

HSBC said remittances thi year have largely been driven by inflows from Asia, Europe, and the Americas.

It said inflows from the Middle East have contracted on a yearly basis since the start of 2018 partly due to the Duterte administration’s ban on the deployment of Filipino workers to Kuwait.

In February, the Department of Labor and Employment issued a total deployment ban due to a series of reports involving abuse and death of Filipino workers in Kuwait.

Last Friday, the Philippines and Kuwait signed a memorandum of agreement providing additional protection for Filipino workers in the Gulf country. This could pave the way for the partial lifting of the deployment ban on Filipino workers to Kuwait.

Personal and cash remittances reached record levels and exceeded the growth target set by the BSP last year, providing support to the country’s economy as a major driver of domestic demand.

Personal remittances rose by 5.3 percent to a record $31.29 billion last year from $29.71 billion in 2017, while cash remittances coursed through banks grew by 4.3 percent to $28.06 billion from $26.9 billion.