Remittances slow in April, but remain above BSP target

MANILA, Philippines — Remittance growth slowed last April, but remained above the target set by the Bangko Sentral ng Pilipinas (BSP).

BSP Governor Benjamin Diokno said personal remittances inched up by 3.7 percent to $2.71 billion in April from $2.62 billion in the same month last year.

This was slower than the 6.4 percent growth recorded in March.

Personal remittances, composed of 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, rose 3.7 percent to $10.81 billion from January to April this year compared to $10.43 billion in the same period last year.

Diokno said the continued growth in personal remittances during the first four months of 2019 was driven by steady remittance inflows from land-based overseas Filipino workers with work contracts of one year or more inching up by 1.2 percent to $8.2 billion from $8.1 billion.

On the other hand, he added inflows from the compensation of sea-based workers and land-based workers with short-term contracts increased by 9.5 percent to $2.3 billion from $2.1 billion.

The BSP chief said cash remittances coursed through banks went up by four percent to $2.44 billion in April from $2.35 billion in the same month last year.

This was slower that the 6.6 percent increase recorded last March.

Diokno said the growth was supported by both land-based workers that went up by 2.2 percent to $1.8 billion and sea-based workers that increased by 10.6 percent to $600 million.

For the first four months of the year, he said cash remittances went up by 4.1 percent to $9.7 billion from $9.4 billion in the same period last year.

Diokno said the US registered the highest share of overall remittances in the first four months of the year at 35.9 percent, followed by Saudi Arabia, Singapore, United Arab Emirates, the United Kingdom, Japan, Canada, Hong Kong, Qatar and Germany.

Remittances usually fuel personal consumption, helping sustain steady economic growth. The amount of money sent home by overseas Filipinos usually account for about 10 percent of gross domestic product.

Strong inflows from remittances, earnings of the business process outsourcing sector as well as tourism receipts continued to boost the peso that recovered strongly late last year.

The BSP has retained the growth target for both personal and cash remittances at three percent for this year.

As a result, the BSP now expects a balance of payments surplus of $3.7 billion instead of a deficit of $3.5 billion this year despite the record current account deficit to $10.1 billion due to wider trade deficit amid strong imports.

The central bank also expects net foreign direct investment inflows to hit $9 billion instead of $10.2 billion and net foreign portfolio or hot money inflows to reach $4 billion instead of a net outflow of $200 million.