Remittance growth fastest in 9 months

MANILA, Philippines — Money sent home by Overseas Filipino Workers (OFWs) recovered in July, recording the fastest growth in nine months, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

BSP Governor Benjamin Diokno said personal remittances went up by 7.2 percent to $2.87 billion in July from $2.67 billion in the same period last year.

The rise in personal remittances was the fastest since the eight percent increase recorded in October last year.

From January to July, Diokno said 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 by 3.6 percent to $19.12 billion from $18.46 billion in the same period last year.

 “The steady growth in personal remittances during the first seven months drew support from the remittance inflows from land–based overseas Filipino workers with work contract of one year or more, which aggregated $14.6 billion from $14.2 billion in the same period last year,” he said.

Diokno said inflows from the compensation of sea-based workers and land-based workers with short-term contracts also contributed to the growth, rising to $4.1 billion from $3.8 billion.

Liewise, the BSP chief said cash remittances coursed through banks also went up by 7.5 percent to $2.58 billion in July from $2.4 billion in the same month last year.

This was the fastest growth since the 8.7 percent increase recorded in October.

For the first seven months, Diokno said cash remittances went up by 3.9 percent to $17.22 billion from $16.58 billion in the same period last year. Remittances from land-based and sea-based workers increased by 2.5 percent to $13.4 billion and 8.9 percent to $3.8 billion, respectively.

According to Diokno, remittances from the US accounted for the highest share of total remittances in the first half of the year with a share of 36.8 percent followed by Saudi Arabia, Singapore, United Arab Emirates, the United Kingdom, Japan, Canada, Hong Kong, Germany and Qatar.

“The combined remittances from these countries accounted for 78.1 percent of the total cash remittances from January to June 2019,” Diokno said.

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

Remittances usually fuel personal consumption, helping sustain a steady economic growth.

The amount of money sent home by overseas Filipinos usually account for 10 percent of gross domestic product (GDP).

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

Jun Trinidad, chief economist at Philippine National Bank (PNB), said in the bank’s latest Macro Alert the peso could still weaken to the 53 to 54 versus $1 level due to the current account (CA) deficit.

Trinidad said the key concern would be the trade and CA deficit risk as well as whether the foreign direct investment (FDI) inflows would remain vibrant once capital goods imports accelerate as well as investment project approvals get converted to actual real investments.