Remittances plunge 16% in April

MANILA, Philippines — Remittances recorded a double-digit drop in April, the steepest decline in almost two decades as the global health crisis continues to displace more overseas Filipino workers (OFWs), according to the Bangko Sentral ng Pilipinas.

Based on BSP data, remittances plunged by more than 16 percent to $2.27 billion in April from $2.71 billion in the same month last year.

The double-digit drop was the widest since the 33.5 percent plunge recorded in January 2001. Close to 350,000 overseas Filipino workers have been displaced since the pandemic broke out.

Remittances are expected to decline further in May, the height of lockdowns and shelter-in-place orders in many host countries around the world that left thousands of overseas Filipinos without income or with sharply reduced income.

Personal remittances from land-based workers with work contracts of one year or more decreased by nearly 18 percent to $1.68 billion in April from $2.04 billion a year ago, while remittances from sea-based workers and land-based workers with work contracts of less than one year declined by more than 10 percent to $547 million from $609 million.

From January to April, the BSP said personal remittances slipped by almost three percent to $10.81 billion from $10.49 billion in the same period last year.

Likewise, the BSP said cash remittances coursed through banks fell by 16.2 percent to $2.05 billion in April from $2.44 billion in the same month last year.

“The decline in cash remittances was attributed to the unexpected repatriation of some overseas Filipinos deployed in countries heavily affected by the pandemic, and temporary closure/limited operating hours of some banks and institutions from both the sending and receiving ends that provide money transfer services during the lockdown,”  the BSP said.

From January to April, cash remittances declined by three percent to $9.45 billion compared to $9.74 billion in the same period last year. Remittances from land-based workers declined by 3.5 percent to $7.33 billion in the first four months from $7.6 billion a years ago, while that of sea-based workers slipped by 1.3 percent to $2.11 billion from $2.14 billion.

The US where most of the correspondent banks are located remained the major source of remittances, accounting for nearly 40 percent of the total  followed by Singapore, Saudi Arabia, United Arab Emirates, the United Kingdom, Canada, Qatar, Hong Kong and Korea.

BSP Governor Benjamin Diokno expects remittances to contract by five percent this year, pulling down the GDP by 0.4 percent  amid large repatriation of workers and major economic disruptions in host countries.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), said remittances likely declined anew in May amid the height of the lockdowns and stay-at-home orders in host countries around the world.

“OFW remittances could remain relatively sluggish in May as many host countries remained in lockdown and also in view of the continued reparation of some OFWs back to the Philippines,” Ricafort said.

Ricafort, however, said remittances likely picked up in June as host countries re-open from lockdowns, enabling some overseas Filipinos to work, earn income, and send money to the Philippines again.